UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03651
Touchstone Strategic Trust
- June Funds
(Exact name of registrant as specified in charter)
303 Broadway,
Suite 1100
Cincinnati, Ohio 45202-4203
(Address of principal executive offices) (Zip code)
E. Blake Moore, Jr.
303 Broadway,
Suite 1100
Cincinnati, Ohio 45202-4203
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-638-8194
Date of fiscal year end: June 30
Date of reporting period: December 31, 2022
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
| (a) | The Report to Shareholders is attached herewith. |
Semi-Annual Report
| Touchstone Strategic Trust |
| Touchstone Balanced Fund |
| Touchstone Core Municipal Bond Fund |
| Touchstone International Equity Fund |
| Touchstone International Growth Fund |
| Touchstone Large Cap Focused Fund |
| Touchstone Large Cap Fund |
| Touchstone Large Company Growth Fund |
| Touchstone Small Company Fund |
| Touchstone Value Fund |
Table of Contents
This report identifies the Funds'
investments on December 31, 2022. These holdings are subject to change. Not all investments in each Fund performed the same, nor is there any guarantee that these investments will perform as well in the future. Market
forecasts provided in this report may not occur.
2
Tabular Presentation of
Portfolios of Investments (Unaudited)
December 31, 2022
The tables below provide
each Fund’s geographic allocation, sector allocation and/or credit quality. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.
* Credit quality ratings
are from S&P Global Ratings ("S&P") and Moody's Investors Service (“Moody's”). If agency ratings differ, the higher rating will be used. Where no rating has been assigned, it may be for
reasons unrelated to the creditworthiness of the issuer.
** Sector
classifications are based upon the Global Industry Classification Standard (GICS®).
3
Tabular Presentation of
Portfolios of Investments (Unaudited) (Continued)
* Sector classifications
are based upon the Global Industry Classification Standard (GICS®).
4
Tabular Presentation of
Portfolios of Investments (Unaudited) (Continued)
* Sector classifications
are based upon the Global Industry Classification Standard (GICS®).
5
Touchstone International Equity
Fund (Unaudited) (Continued)
| Shares | Market Value | |||
| Short-Term Investment Fund — 5.0% | ||||
| 5,008,734 | Dreyfus Government Cash Management, Institutional Shares, 4.19%∞Ω | $ 5,008,734 | ||
| Total Investment Securities — 99.5% (Cost $97,481,154) | $100,068,116 | |||
| Other Assets in Excess of Liabilities — 0.5% | 460,708 | |||
| Net Assets — 100.0% | $100,528,824 | |||
| * | Non-income producing security. |
| ∞ | Open-End Fund. |
| Ω | Represents the 7-Day SEC yield as of December 31, 2022. |
| Portfolio Abbreviations: |
| ADR – American Depositary Receipt |
| PLC – Public Limited Company |
| 144a - This is a restricted security that was sold in a transaction qualifying for the exemption under Rule 144a of the Securities Act of 1933. This security may be sold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2022, these securities were valued at $5,102,109 or 5.1% of net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees. |
Other Information:
The inputs or methodology
used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below,
please refer to the security valuation section in the accompanying Notes to Financial Statements.
| Valuation inputs at Reporting Date: | ||||
| Description | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | ||||
| France | $— | $18,781,208 | $— | $18,781,208 |
| United Kingdom | 375,732 | 14,853,880 | — | 15,229,612 |
| Switzerland | — | 9,863,940 | — | 9,863,940 |
| Germany | — | 9,771,671 | — | 9,771,671 |
| Canada | 5,231,692 | — | — | 5,231,692 |
| Brazil | 4,483,465 | — | — | 4,483,465 |
| Mexico | 4,271,526 | — | — | 4,271,526 |
| Japan | — | 3,783,279 | — | 3,783,279 |
| United States | 3,116,572 | — | — | 3,116,572 |
| South Korea | — | 2,984,741 | — | 2,984,741 |
| Hong Kong | — | 2,813,953 | — | 2,813,953 |
| Greece | — | 2,207,050 | — | 2,207,050 |
| China | — | 2,200,579 | — | 2,200,579 |
| Taiwan | 2,130,414 | — | — | 2,130,414 |
| India | — | 1,965,150 | — | 1,965,150 |
| Netherlands | — | 1,908,382 | — | 1,908,382 |
| Spain | — | 1,731,784 | — | 1,731,784 |
| Norway | — | 1,391,457 | — | 1,391,457 |
| Tanzania | 1,192,907 | — | — | 1,192,907 |
| Short-Term Investment Fund | 5,008,734 | — | — | 5,008,734 |
| Total | $25,811,042 | $74,257,074 | $— | $100,068,116 |
See accompanying Notes to Financial
Statements.
14
Touchstone International Growth
Fund (Unaudited) (Continued)
| Portfolio Abbreviations: |
| ADR – American Depositary Receipt |
| PCL – Public Company Limited |
| PLC – Public Limited Company |
| REIT – Real Estate Investment Trust |
| 144a - This is a restricted security that was sold in a transaction qualifying for the exemption under Rule 144a of the Securities Act of 1933. This security may be sold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2022, these securities were valued at $4,548,341 or 7.9% of net assets. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees. |
Other Information:
The inputs or methodology
used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below,
please refer to the security valuation section in the accompanying Notes to Financial Statements.
| Valuation inputs at Reporting Date: | ||||
| Description | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | ||||
| United Kingdom | $2,946,373 | $6,159,263 | $— | $9,105,636 |
| India | 6,689,858 | 2,001,712 | — | 8,691,570 |
| Canada | 7,967,396 | — | — | 7,967,396 |
| Switzerland | — | 4,610,279 | — | 4,610,279 |
| France | — | 4,191,107 | — | 4,191,107 |
| United States | 2,972,861 | — | — | 2,972,861 |
| Israel | 2,832,579 | — | — | 2,832,579 |
| Sweden | — | 2,260,757 | — | 2,260,757 |
| Germany | — | 2,157,176 | — | 2,157,176 |
| Singapore | — | 1,938,869 | — | 1,938,869 |
| Argentina | 1,732,048 | — | — | 1,732,048 |
| Spain | — | 1,728,221 | — | 1,728,221 |
| Netherlands | — | 1,558,876 | — | 1,558,876 |
| Taiwan | 1,346,034 | — | — | 1,346,034 |
| Thailand | — | 1,255,039 | — | 1,255,039 |
| Indonesia | — | 1,192,744 | — | 1,192,744 |
| Italy | — | 1,133,175 | — | 1,133,175 |
| Japan | — | 868,070 | — | 868,070 |
| Short-Term Investment Fund | 735 | — | — | 735 |
| Total | $26,487,884 | $31,055,288 | $— | $57,543,172 |
See accompanying Notes to Financial
Statements.
16
Touchstone Small Company
Fund (Unaudited) (Continued)
Other Information:
The inputs or methodology
used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below,
please refer to the security valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Level 1 | Level 2 | Level 3 | Total |
| Common Stocks | $812,449,919 | $— | $— | $812,449,919 |
| Short-Term Investment Funds | 18,454,930 | — | — | 18,454,930 |
| Total | $830,904,849 | $— | $— | $830,904,849 |
See accompanying Notes to Financial
Statements.
21
Statements of Assets and
Liabilities
December 31, 2022 (Unaudited)
| Touchstone Balanced Fund | Touchstone Core Municipal Bond Fund | Touchstone International Equity Fund | Touchstone International Growth Fund | Touchstone Large Cap Focused Fund | Touchstone Large Cap Fund | |
| Assets | ||||||
| Investments, at cost | $666,761,546 | $55,771,603 | $97,481,154 | $58,216,338 | $1,733,493,896 | $173,584,845 |
| Investments, at market value * | $733,005,161 | $53,550,451 | $100,068,116 | $57,543,172 | $2,485,667,072 | $270,354,663 |
| Cash | — | — | — | — | 55 | — |
| Foreign currency † | 990 | — | 2,173 | 11 | — | — |
| Dividends and interest receivable | 2,115,150 | 639,116 | 138,779 | 10,240 | 1,759,529 | 320,829 |
| Receivable for capital shares sold | 650,812 | 21,796 | 54,119 | 6,670 | 1,903,567 | 19,089 |
| Receivable for investments sold | — | — | — | 158,599 | — | — |
| Receivable for securities lending income | 96 | — | 2,505 | 564 | — | — |
| Tax reclaim receivable | 6,336 | — | 504,201 | 126,382 | — | — |
| Other assets | 12,285 | 3,789 | 5,953 | 14,612 | 23,842 | 1,087 |
| Total Assets | 735,790,830 | 54,215,152 | 100,775,846 | 57,860,250 | 2,489,354,065 | 270,695,668 |
| Liabilities | ||||||
| Bank overdrafts | — | — | — | 15,012 | — | — |
| Dividends payable | 45 | 9,817 | — | — | — | — |
| Payable for return of collateral for securities on loan | — | — | — | — | — | — |
| Deferred foreign capital gains tax | — | — | — | 3,114 | — | — |
| Payable for capital shares redeemed | 1,184,995 | 110,830 | 42,571 | 165,787 | 2,643,748 | 721,598 |
| Payable for investments purchased | — | 530,035 | — | — | — | — |
| Payable to Investment Adviser | 311,000 | 12,432 | 55,975 | 20,528 | 1,126,881 | 116,837 |
| Payable to other affiliates | 262,598 | 6,823 | 24,336 | 7,355 | 690,632 | 34,067 |
| Payable to Trustees | 7,090 | 7,090 | 7,090 | 7,090 | 7,090 | 7,090 |
| Payable for professional services | 26,570 | 13,103 | 28,004 | 32,310 | 66,155 | 17,276 |
| Payable for reports to shareholders | 3,736 | 1,518 | 4,074 | 8,860 | 5,363 | 2,192 |
| Payable for transfer agent services | 239,484 | 7,111 | 68,201 | 44,823 | 687,068 | 82,718 |
| Other accrued expenses and liabilities | 20,269 | 7,183 | 16,771 | 13,152 | 86,174 | 17,518 |
| Total Liabilities | 2,055,787 | 705,942 | 247,022 | 318,031 | 5,313,111 | 999,296 |
| Net Assets | $733,735,043 | $53,509,210 | $100,528,824 | $57,542,219 | $2,484,040,954 | $269,696,372 |
| Net assets consist of: | ||||||
| Paid-in capital | 672,872,198 | 56,816,039 | 171,952,153 | 71,152,194 | 1,689,410,598 | 171,935,840 |
| Distributable earnings (deficit) | 60,862,845 | (3,306,829) | (71,423,329) | (13,609,975) | 794,630,356 | 97,760,532 |
| Net Assets | $733,735,043 | $53,509,210 | $100,528,824 | $57,542,219 | $2,484,040,954 | $269,696,372 |
| *Includes market value of securities on loan of: | $— | $— | $— | $— | $— | $— |
| †Cost of foreign currency: | $1,028 | $— | $2,208 | $12 | $— | $— |
See accompanying Notes to Financial
Statements.
24
Statements of Assets and
Liabilities (Unaudited) (Continued)
| Touchstone Large Company Growth Fund | Touchstone Small Company Fund | Touchstone Value Fund |
| $118,047,811 | $684,128,035 | $435,427,748 |
| $148,468,972 | $830,904,849 | $521,927,449 |
| 100,590 | 15 | 3 |
| — | 195 | — |
| 8,485 | 436,083 | 1,128,101 |
| 154,605 | 950,031 | 179,445 |
| — | — | — |
| — | 754 | — |
| — | — | — |
| 2,430 | 21,486 | 3,121 |
| 148,735,082 | 832,313,413 | 523,238,119 |
| — | — | — |
| — | — | — |
| — | 1,099,836 | — |
| — | — | — |
| 241,257 | 1,569,634 | 857,878 |
| — | — | 577,246 |
| 56,333 | 461,696 | 232,061 |
| 18,360 | 220,868 | 97,068 |
| 7,090 | 7,090 | 7,090 |
| 15,024 | 29,188 | 17,809 |
| 1,961 | 7,729 | 4,330 |
| 26,811 | 278,729 | 131,403 |
| 15,495 | 26,496 | 9,680 |
| 382,331 | 3,701,266 | 1,934,565 |
| $148,352,751 | $828,612,147 | $521,303,554 |
| 113,061,178 | 700,568,074 | 441,569,602 |
| 35,291,573 | 128,044,073 | 79,733,952 |
| $148,352,751 | $828,612,147 | $521,303,554 |
| $— | $1,089,132 | $— |
| $— | $195 | $— |
25
Statements of Assets and
Liabilities (Unaudited) (Continued)
| Touchstone Balanced Fund | Touchstone Core Municipal Bond Fund | Touchstone International Equity Fund | Touchstone International Growth Fund | Touchstone Large Cap Focused Fund | Touchstone Large Cap Fund | |
| Pricing of Class A Shares | ||||||
| Net assets applicable to Class A shares | $508,866,193 | $23,327,730 | $75,653,424 | $1,152,751 | $1,706,985,881 | $5,146,632 |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 23,587,449 | 2,194,267 | 5,568,555 | 111,479 | 35,787,723 | 330,483 |
| Net asset value price per share* | $21.57 | $10.63 | $13.59 | $10.34 | $47.70 | $15.57 |
| Maximum sales charge - Class A shares | 5.00% | 3.25% | 5.00% | 5.00% | 5.00% | 5.00% |
| Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent) - Class A shares | $22.71 | $10.99 | $14.31 | $10.88 | $50.21 | $16.39 |
| Pricing of Class C Shares | ||||||
| Net assets applicable to Class C shares | $69,619,327 | $1,347,631 | $2,087,255 | $647,297 | $46,364,652 | $2,485,543 |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 3,221,711 | 126,744 | 167,893 | 65,511 | 1,080,596 | 163,460 |
| Net asset value and offering price per share** | $21.61 | $10.63 | $12.43 | $9.88 | $42.91 | $15.21 |
| Pricing of Class Y Shares | ||||||
| Net assets applicable to Class Y shares | $155,136,509 | $2,916,702 | $19,401,510 | $44,815,775 | $510,482,868 | $191,846,933 |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 7,259,415 | 273,898 | 1,448,282 | 4,208,291 | 10,718,090 | 12,322,499 |
| Net asset value, offering price and redemption price per share | $21.37 | $10.65 | $13.40 | $10.65 | $47.63 | $15.57 |
| Pricing of Institutional Class Shares | ||||||
| Net assets applicable to Institutional Class shares | $— | $25,917,147 | $3,386,635 | $10,926,396 | $218,329,709 | $70,217,264 |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | — | 2,434,926 | 253,337 | 1,017,310 | 4,575,500 | 4,508,239 |
| Net asset value, offering price and redemption price per share | $— | $10.64 | $13.37 | $10.74 | $47.72 | $15.58 |
| Pricing of Class R6 Shares | ||||||
| Net assets applicable to Class R6 shares | $113,014 | $— | $— | $— | $1,877,844 | $— |
| Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 5,291 | — | — | — | 39,332 | — |
| Net asset value, offering price and redemption price per share | $21.36 | $— | $— | $— | $47.74 | $— |
| ^ | The Shares of beneficial interest outstanding and Net asset value and offering price per share were updated to reflect the effect of a 1 for 0.379048 reverse stock split for Class C shares on October 14, 2022 (See Note 9 in the Notes to Financial Statements). |
| * | There is no sales load on subscriptions of $1 million or more for all funds except for Core Municipal Bond Fund. There is no sales load on subscriptions of $500,000 or more for Core Municipal Bond Fund. Redemptions that were part of a $500,000 or $1 million or more subscription, as applicable, may be subject to a contingent deferred sales load if redeemed within a one-year period from the date of purchase. |
| ** | Redemption price per share varies by length of time shares are held due to the terms of the contingent deferred sales charge. |
See accompanying Notes to Financial
Statements.
26
Statements of Assets and
Liabilities (Unaudited) (Continued)
| Touchstone Large Company Growth Fund | Touchstone Small Company Fund^ | Touchstone Value Fund |
| $3,368,196 | $468,614,659 | $162,336,241 |
| 96,765 | 97,047,662 | 16,150,514 |
| $34.81 | $4.83 | $10.05 |
| 5.00% | 5.00% | 5.00% |
| $36.64 | $5.08 | $10.58 |
| $208,725 | $16,516,470 | $5,576,010 |
| 6,432 | 3,442,382 | 556,911 |
| $32.45 | $4.80 | $10.01 |
| $7,216,770 | $256,636,901 | $105,205,741 |
| 202,722 | 46,230,726 | 10,409,885 |
| $35.60 | $5.55 | $10.11 |
| $137,559,060 | $23,083,694 | $226,749,467 |
| 3,828,121 | 4,155,149 | 22,522,918 |
| $35.93 | $5.56 | $10.07 |
| $— | $63,760,423 | $21,436,095 |
| — | 12,573,572 | 2,128,041 |
| $— | $5.07 | $10.07 |
27
Statements of Operations For the Six Months Ended December 31, 2022 (Unaudited)
| Touchstone Balanced Fund | Touchstone Core Municipal Bond Fund | Touchstone International Equity Fund | Touchstone International Growth Fund | Touchstone Large Cap Focused Fund | Touchstone Large Cap Fund | |
| Investment Income | ||||||
| Dividends* | $3,885,945 | $45,917 | $1,042,246 | $355,730 | $17,406,938 | $2,315,445 |
| Interest | 4,198,238 | 776,576 | — | — | 1,410 | — |
| Income from securities loaned | 1,938 | — | 4,152 | 4,143 | — | — |
| Total Investment Income | 8,086,121 | 822,493 | 1,046,398 | 359,873 | 17,408,348 | 2,315,445 |
| Expenses | ||||||
| Investment advisory fees | 1,857,252 | 112,264 | 348,170 | 240,261 | 6,979,629 | 827,886 |
| Administration fees | 523,750 | 38,772 | 68,713 | 41,486 | 1,775,105 | 190,609 |
| Compliance fees and expenses | 1,758 | 1,758 | 1,758 | 1,758 | 1,758 | 1,758 |
| Custody fees | 26,157 | 2,695 | 12,885 | 7,872 | 15,852 | 5,318 |
| Professional fees | 28,495 | 14,304 | 23,677 | 21,835 | 59,069 | 16,327 |
| Transfer Agent fees, Class A | 215,267 | 6,058 | 57,048 | 1,573 | 533,530 | 2,053 |
| Transfer Agent fees, Class C | 27,542 | 266 | 2,414 | 568 | 24,236 | 629 |
| Transfer Agent fees, Class Y | 78,372 | 1,509 | 13,129 | 32,148 | 251,194 | 79,946 |
| Transfer Agent fees, Institutional Class | — | 304 | 69 | 3,947 | 35,094 | 3,065 |
| Transfer Agent fees, Class R6 | 10 | — | — | — | 22 | — |
| Registration Fees, Class A | 12,890 | 4,436 | 9,801 | 4,466 | 18,394 | 5,614 |
| Registration Fees, Class C | 6,795 | 1,379 | 4,858 | 3,341 | 7,321 | 2,876 |
| Registration Fees, Class Y | 10,825 | 2,874 | 7,010 | 6,244 | 16,767 | 10,645 |
| Registration Fees, Institutional Class | — | 1,967 | 2,725 | 4,768 | 7,798 | 6,074 |
| Registration Fees, Class R6 | 1,885 | — | — | — | 2,142 | — |
| Reports to Shareholders, Class A | 10,609 | 1,224 | 3,811 | 1,022 | 18,588 | 983 |
| Reports to Shareholders, Class C | 2,435 | 895 | 1,733 | 920 | 2,285 | 924 |
| Reports to Shareholders, Class Y | 6,189 | 953 | 1,732 | 3,658 | 11,320 | 6,304 |
| Reports to Shareholders, Institutional Class | — | 907 | 893 | 980 | 3,576 | 962 |
| Reports to Shareholders, Class R6 | 875 | — | — | — | 902 | — |
| Distribution expenses, Class A | 657,709 | 30,830 | 92,984 | 1,536 | 2,220,654 | 6,094 |
| Distribution and shareholder servicing expenses, Class C | 366,692 | 5,067 | 10,987 | 3,538 | 247,082 | 13,498 |
| Trustee fees | 13,190 | 13,190 | 13,190 | 13,190 | 13,190 | 13,190 |
| Other expenses | 95,461 | 13,306 | 47,681 | 33,533 | 393,240 | 66,281 |
| Total Expenses | 3,944,158 | 254,958 | 725,268 | 428,644 | 12,638,748 | 1,261,036 |
| Fees waived and/or reimbursed by the Adviser and/or Affiliates(A) | (9,023) | (74,381) | (85,878) | (131,811) | (466,532) | (169,197) |
| Net Expenses | 3,935,135 | 180,577 | 639,390 | 296,833 | 12,172,216 | 1,091,839 |
| Net Investment Income (Loss) | 4,150,986 | 641,916 | 407,008 | 63,040 | 5,236,132 | 1,223,606 |
| Realized and Unrealized Gains (Losses) on Investments | ||||||
| Net realized gains (losses) on investments(B) | (2,818,060) | (1,049,538) | (4,856,852) | (6,230,907) | 38,895,143 | 92,580 |
| Net realized losses on futures contracts | (388,596) | — | — | — | — | — |
| Net realized gains on swap agreements | 131,481 | — | — | — | — | — |
| Net realized losses on foreign currency transactions | — | — | (84,939) | (12,266) | — | — |
| Net change in unrealized appreciation (depreciation) on investments† | 6,568,430 | 462,629 | 8,166,832 | 5,411,641 | 23,169,453 | 13,615,947 |
| Net change in unrealized appreciation (depreciation) on foreign currency transactions | (40) | — | (11,641) | 4,304 | — | — |
| Net Realized and Unrealized Gains (Losses) on Investments | 3,493,215 | (586,909) | 3,213,400 | (827,228) | 62,064,596 | 13,708,527 |
| Change in Net Assets Resulting from Operations | $7,644,201 | $55,007 | $3,620,408 | $(764,188) | $67,300,728 | $14,932,133 |
| *Net of foreign tax withholding of: | $— | $— | $92,869 | $4,758 | $— | $— |
| †Includes increase in deferred foreign capital gains tax of: | $— | $— | $— | $3,114 | $— | $— |
| (A) | See Note 4 in Notes to Financial Statements. |
| (B) | For the six months ended December 31, 2022, Large Cap Focused Fund, Large Cap Fund, Large Company Growth Fund and Small Company Fund had redemptions-in-kind of securities in the amount of $84,552,621, $14,136,317, $9,895,085 and $14,948,558 respectively. Net realized gains (losses) on investments includes the realized gain on the transactions of $45,407,516, $5,882,633, $3,682,176 and $5,646,995, respectively, which will not be recognized by the Fund for tax purposes. |
See accompanying Notes to Financial
Statements.
28
Statements of Operations (Unaudited) (Continued)
| Touchstone Large Company Growth Fund | Touchstone Small Company Fund | Touchstone Value Fund |
| $500,228 | $4,847,352 | $6,481,698 |
| — | — | — |
| 18 | 9,706 | 4 |
| 500,246 | 4,857,058 | 6,481,702 |
| 488,693 | 2,796,818 | 1,552,183 |
| 112,496 | 569,116 | 364,603 |
| 1,758 | 1,758 | 1,758 |
| 4,144 | 13,010 | 7,338 |
| 14,373 | 26,328 | 21,902 |
| 1,757 | 186,156 | 76,215 |
| 139 | 10,325 | 2,422 |
| 7,727 | 135,134 | 43,871 |
| 27,804 | 5,983 | 48,264 |
| — | 102 | 13 |
| 5,345 | 11,857 | 6,389 |
| 3,685 | 6,038 | 3,287 |
| 5,411 | 10,777 | 7,185 |
| 8,699 | 5,465 | 13,845 |
| — | 5,446 | 4,634 |
| 955 | 10,629 | 5,429 |
| 880 | 1,872 | 1,017 |
| 1,173 | 10,029 | 2,848 |
| 1,584 | 1,336 | 6,260 |
| — | 1,342 | 875 |
| 4,353 | 598,016 | 202,102 |
| 1,124 | 88,915 | 27,575 |
| 13,190 | 13,190 | 13,190 |
| 36,849 | 117,866 | 45,856 |
| 742,139 | 4,627,508 | 2,459,061 |
| (142,369) | (155,435) | (237,383) |
| 599,770 | 4,472,073 | 2,221,678 |
| (99,524) | 384,985 | 4,260,024 |
| 5,216,475 | (4,037,078) | (736,675) |
| — | — | — |
| — | — | — |
| — | (17,405) | — |
| (5,259,953) | 70,408,821 | 36,926,587 |
| — | — | — |
| (43,478) | 66,354,338 | 36,189,912 |
| $(143,002) | $66,739,323 | $40,449,936 |
| $2,907 | $— | $— |
| $— | $— | $— |
29
Statements of Changes in Net
Assets
| Touchstone Balanced Fund | Touchstone Core Municipal Bond Fund | Touchstone International Equity Fund | ||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | |
| From Operations | ||||||
| Net investment income (loss) | $4,150,986 | $4,695,432 | $641,916 | $1,004,748 | $407,008 | $1,452,044 |
| Net realized gains (losses) on investments, futures contracts, swap agreements and foreign currency transactions | (3,075,175) | 34,295,324 | (1,049,538) | (24,917) | (4,941,791) | 7,805,000 |
| Net change in unrealized appreciation (depreciation) on investments, futures contracts and foreign currency transactions | 6,568,390 | (163,247,150) | 462,629 | (6,539,645) | 8,155,191 | (34,315,313) |
| Change in Net Assets from Operations | 7,644,201 | (124,256,394) | 55,007 | (5,559,814) | 3,620,408 | (25,058,269) |
| Distributions to Shareholders: | ||||||
| Distributed earnings, Class A | (3,114,303) | (18,683,622) | (263,076) | (422,124) | (1,163,208) | (12,810,410) |
| Distributed earnings, Class C | (149,206) | (2,017,932) | (6,991) | (8,006) | (28,135) | (443,920) |
| Distributed earnings, Class Y | (1,130,676) | (7,153,486) | (34,124) | (56,450) | (337,719) | (3,217,018) |
| Distributed earnings, Institutional Class | — | — | (337,714) | (551,274) | (60,528) | (555,566) |
| Distributed earnings, Class R6 | (907) | (430) | — | — | — | — |
| Total Distributions | (4,395,092) | (27,855,470) | (641,905) | (1,037,854) | (1,589,590) | (17,026,914) |
| Change in Net Assets from Share Transactions(A) | (20,623,160) | 317,880,186 | (4,381,669) | 15,095,708 | (4,273,777) | 22,502,489 |
| Total Increase (Decrease) in Net Assets | (17,374,051) | 165,768,322 | (4,968,567) | 8,498,040 | (2,242,959) | (19,582,694) |
| Net Assets | ||||||
| Beginning of period | 751,109,094 | 585,340,772 | 58,477,777 | 49,979,737 | 102,771,783 | 122,354,477 |
| End of period | $733,735,043 | $751,109,094 | $53,509,210 | $58,477,777 | $100,528,824 | $102,771,783 |
| (A) | For details on share transactions by class, see Statements of Changes in Net Assets - Capital Stock Activity on pages 34-37. |
See accompanying Notes to Financial
Statements.
30
Statements of Changes in Net
Assets (Continued)
| Touchstone International Growth Fund | Touchstone Large Cap Focused Fund | Touchstone Large Cap Fund | Touchstone Large Company Growth Fund | ||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 |
| $63,040 | $(14,650) | $5,236,132 | $5,805,824 | $1,223,606 | $2,725,934 | $(99,524) | $(661,608) |
| (6,243,173) | (2,646,945) | 38,895,143 | 254,979,759 | 92,580 | 22,912,067 | 5,216,475 | 52,866,635 |
| 5,415,945 | (26,815,195) | 23,169,453 | (674,276,909) | 13,615,947 | (58,860,797) | (5,259,953) | (106,678,470) |
| (764,188) | (29,476,790) | 67,300,728 | (413,491,326) | 14,932,133 | (33,222,796) | (143,002) | (54,473,443) |
| (1,746) | — | (26,722,797) | (144,110,933) | (186,418) | (138,543) | (115,696) | (686,500) |
| — | — | (723,298) | (4,540,418) | (83,858) | (84,629) | (7,968) | (91,216) |
| (125,266) | — | (8,798,604) | (46,283,019) | (7,705,511) | (7,855,117) | (256,507) | (4,818,063) |
| (35,539) | (362) | (3,775,076) | (15,167,079) | (2,900,891) | (2,885,087) | (4,584,366) | (42,296,250) |
| — | — | (32,814) | (165) | — | — | — | — |
| (162,551) | (362) | (40,052,589) | (210,101,614) | (10,876,678) | (10,963,376) | (4,964,537) | (47,892,029) |
| (2,559,173) | (10,868,501) | (41,382,146) | 756,668,107 | (12,456,655) | (46,985,624) | (9,392,614) | 2,486,868 |
| (3,485,912) | (40,345,653) | (14,134,007) | 133,075,167 | (8,401,200) | (91,171,796) | (14,500,153) | (99,878,604) |
| 61,028,131 | 101,373,784 | 2,498,174,961 | 2,365,099,794 | 278,097,572 | 369,269,368 | 162,852,904 | 262,731,508 |
| $57,542,219 | $61,028,131 | $2,484,040,954 | $2,498,174,961 | $269,696,372 | $278,097,572 | $148,352,751 | $162,852,904 |
31
Statements of Changes in Net
Assets (Continued)
| Touchstone Small Company Fund | Touchstone Value Fund | |||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | |
| From Operations | ||||
| Net investment income (loss) | $384,985 | $(2,103,171) | $4,260,024 | $7,223,081 |
| Net realized gains (losses) on investments and foreign currency transactions | (4,054,483) | 72,652,306 | (736,675) | 53,432,153 |
| Net change in unrealized appreciation (depreciation) on investments | 70,408,821 | (239,902,157) | 36,926,587 | (84,024,306) |
| Change in Net Assets from Operations | 66,739,323 | (169,353,022) | 40,449,936 | (23,369,072) |
| Distributions to Shareholders: | ||||
| Distributed earnings, Class A | (11,830,362) | (100,933,144) | (10,212,282) | (14,640,827) |
| Distributed earnings, Class C | (432,280) | (8,485,889) | (329,415) | (442,410) |
| Distributed earnings, Class Y | (5,543,535) | (42,208,035) | (6,749,640) | (8,719,641) |
| Distributed earnings, Institutional Class | (507,462) | (2,833,076) | (14,917,596) | (25,683,573) |
| Distributed earnings, Class R6 | (1,463,929) | (10,437,867) | (1,439,300) | (1,961) |
| Total Distributions | (19,777,568) | (164,898,011) | (33,648,233) | (49,488,412) |
| Change in Net Assets from Share Transactions(A) | 16,244,961 | 100,055,548 | 12,542,014 | 150,160,610 |
| Total Increase (Decrease) in Net Assets | 63,206,716 | (234,195,485) | 19,343,717 | 77,303,126 |
| Net Assets | ||||
| Beginning of period | 765,405,431 | 999,600,916 | 501,959,837 | 424,656,711 |
| End of period | $828,612,147 | $765,405,431 | $521,303,554 | $501,959,837 |
| (A) | For details on share transactions by class, see Statements of Changes in Net Assets - Capital Stock Activity on pages 37-38. |
See accompanying Notes to Financial
Statements.
32
Statements of Changes in Net
Assets - Capital Stock Activity
| Touchstone Balanced Fund | Touchstone Core Municipal Bond Fund | |||||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022(A) | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | |||||
| Shares | Dollars | Shares | Dollars | Shares | Dollars | Shares | Dollars | |
| Class A(B) | ||||||||
| Proceeds from Shares issued | 641,373 | $13,984,347 | 2,071,514 | $51,804,611 | 39,383 | $415,123 | 82,130 | $942,504 |
| Proceeds from Shares issued in connection with reorganization | — | — | 12,703,235 | 326,253,191 | — | — | — | — |
| Reinvestment of distributions | 139,488 | 2,947,196 | 695,294 | 17,702,007 | 20,420 | 215,832 | 29,811 | 342,750 |
| Cost of Shares redeemed | (1,495,188) | (32,516,592) | (3,788,521) | (94,469,765) | (206,054) | (2,162,875) | (367,762) | (4,187,142) |
| Change from Class A Share Transactions | (714,327) | (15,585,049) | 11,681,522 | 301,290,044 | (146,251) | (1,531,920) | (255,821) | (2,901,888) |
| Class C | ||||||||
| Proceeds from Shares issued | 181,772 | 3,989,461 | 894,829 | 22,824,368 | 76,737 | 822,406 | 33,277 | 366,528 |
| Proceeds from Shares issued in connection with reorganization | — | — | 721,908 | 18,587,124 | — | — | — | — |
| Reinvestment of distributions | 6,951 | 147,724 | 77,652 | 2,003,428 | 656 | 6,934 | 689 | 7,946 |
| Cost of Shares redeemed | (403,182) | (8,712,875) | (816,261) | (20,385,578) | (38,527) | (404,497) | (45,123) | (494,884) |
| Change from Class C Share Transactions | (214,459) | (4,575,690) | 878,128 | 23,029,342 | 38,866 | 424,843 | (11,157) | (120,410) |
| Class Y(C) | ||||||||
| Proceeds from Shares issued | 1,187,241 | 25,836,620 | 4,190,499 | 102,045,837 | 222,051 | 2,331,793 | 79,167 | 908,797 |
| Proceeds from Shares issued in connection with reorganization | — | — | — | — | — | — | — | — |
| Reinvestment of distributions | 53,920 | 1,128,266 | 283,307 | 7,147,940 | 2,521 | 26,603 | 3,831 | 44,150 |
| Cost of Shares redeemed | (1,273,922) | (27,428,213) | (5,008,449) | (115,748,212) | (205,792) | (2,135,162) | (117,610) | (1,328,373) |
| Change from Class Y Share Transactions | (32,761) | (463,327) | (534,643) | (6,554,435) | 18,780 | 223,234 | (34,612) | (375,426) |
| Institutional Class | ||||||||
| Proceeds from Shares issued | — | — | — | — | 10,429 | 112,000 | 1,731,152 | 20,620,289 |
| Reinvestment of distributions | — | — | — | — | 31,901 | 337,714 | 47,679 | 547,245 |
| Cost of Shares redeemed | — | — | — | — | (373,346) | (3,947,540) | (229,859) | (2,674,102) |
| Change from Institutional Class Share Transactions | — | — | — | — | (331,016) | (3,497,826) | 1,548,972 | 18,493,432 |
| Class R6 | ||||||||
| Proceeds from Shares issued | — | — | 5,228 | 114,805 | — | — | — | — |
| Reinvestment of distributions | 43 | 906 | 20 | 430 | — | — | — | — |
| Change from Class R6 Share Transactions | 43 | 906 | 5,248 | 115,235 | — | — | — | — |
| Change from Share Transactions | (961,504) | $(20,623,160) | 12,030,255 | $317,880,186 | (419,621) | $(4,381,669) | 1,247,382 | $15,095,708 |
| (A) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
| (B) | Effective July 16, 2021, Class B shares of the AIG Active Allocation Fund and AIG Multi-Asset Allocation Fund were reorganized into Class A shares of the Touchstone Balanced Fund. |
| (C) | Effective July 16, 2021, Class W shares of the AIG International Dividend Strategy Fund were reorganized into Class Y shares of the Touchstone International Equity Fund. |
See accompanying Notes to Financial
Statements.
34
Statements of Changes in Net
Assets - Capital Stock Activity (Continued)
| Touchstone International Equity Fund | Touchstone International Growth Fund | ||||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | ||||
| Shares | Dollars | Shares | Dollars | Shares | Dollars | Shares | Dollars |
| 79,850 | $1,056,343 | 469,378 | $8,288,140 | 10,800 | $113,513 | 25,427 | $341,175 |
| — | — | 2,291,115 | 43,002,245 | — | — | — | — |
| 81,514 | 1,103,694 | 811,352 | 12,465,621 | 157 | 1,587 | — | — |
| (358,875) | (4,716,041) | (2,467,086) | (43,314,837) | (11,117) | (117,015) | (58,165) | (773,559) |
| (197,511) | (2,556,004) | 1,104,759 | 20,441,169 | (160) | (1,915) | (32,738) | (432,384) |
| 6,544 | 80,066 | 29,057 | 424,401 | 4,775 | 47,301 | 9,141 | 112,674 |
| — | — | 122,778 | 2,140,804 | — | — | — | — |
| 2,171 | 26,900 | 30,546 | 429,513 | — | (5) | — | — |
| (37,701) | (463,081) | (106,024) | (1,641,566) | (17,479) | (174,705) | (19,774) | (254,521) |
| (28,986) | (356,115) | 76,357 | 1,353,152 | (12,704) | (127,409) | (10,633) | (141,847) |
| 52,560 | 684,946 | 348,174 | 5,357,930 | 21,085 | 224,055 | 117,736 | 1,738,578 |
| — | — | 53,869 | 998,993 | — | — | — | — |
| 25,019 | 333,999 | 209,605 | 3,180,484 | 11,590 | 121,293 | — | — |
| (187,130) | (2,423,795) | (549,548) | (9,100,100) | (248,168) | (2,640,735) | (418,756) | (5,776,915) |
| (109,551) | (1,404,850) | 62,100 | 437,307 | (215,493) | (2,295,387) | (301,020) | (4,038,337) |
| 14 | 185 | 716 | 12,694 | 10,441 | 115,148 | 89,919 | 1,315,535 |
| 4,544 | 60,529 | 36,664 | 555,566 | 3,332 | 35,182 | 25 | 360 |
| (1,328) | (17,522) | (18,960) | (297,399) | (25,514) | (284,792) | (529,482) | (7,571,828) |
| 3,230 | 43,192 | 18,420 | 270,861 | (11,741) | (134,462) | (439,538) | (6,255,933) |
| — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — |
| — | — | — | — | — | — | — | — |
| (332,818) | $(4,273,777) | 1,261,636 | $22,502,489 | (240,098) | $(2,559,173) | (783,929) | $(10,868,501) |
35
Statements of Changes in Net
Assets - Capital Stock Activity (Continued)
| Touchstone Large Cap Focused Fund | Touchstone Large Cap Fund | |||||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022(A) | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | |||||
| Shares | Dollars | Shares | Dollars | Shares | Dollars | Shares | Dollars | |
| Class A | ||||||||
| Proceeds from Shares issued | 380,983 | $18,558,149 | 1,340,013 | $77,295,565 | 41,813 | $663,094 | 78,046 | $1,363,874 |
| Proceeds from Shares issued in connection with reorganization | — | — | 11,569,461 | 681,748,263 | — | — | — | — |
| Reinvestment of distributions | 512,575 | 24,803,280 | 2,295,540 | 133,285,514 | 10,508 | 165,562 | 6,281 | 118,085 |
| Cost of Shares redeemed | (1,906,808) | (93,186,343) | (4,668,669) | (265,221,706) | (14,920) | (239,611) | (30,720) | (525,957) |
| Change from Class A Share Transactions | (1,013,250) | (49,824,914) | 10,536,345 | 627,107,636 | 37,401 | 589,045 | 53,607 | 956,002 |
| Class C | ||||||||
| Proceeds from Shares issued | 77,229 | 3,382,322 | 224,240 | 11,852,311 | 19,321 | 295,850 | 10,943 | 175,780 |
| Proceeds from Shares issued in connection with reorganization | — | — | 446,479 | 24,084,368 | — | — | — | — |
| Reinvestment of distributions | 16,420 | 716,415 | 85,678 | 4,508,375 | 5,393 | 82,939 | 4,613 | 84,323 |
| Cost of Shares redeemed | (165,383) | (7,237,157) | (379,100) | (19,674,805) | (59,988) | (951,654) | (63,742) | (1,113,651) |
| Change from Class C Share Transactions | (71,734) | (3,138,420) | 377,297 | 20,770,249 | (35,274) | (572,865) | (48,186) | (853,548) |
| Class Y(B) | ||||||||
| Proceeds from Shares issued | 1,733,841 | 84,803,807 | 4,114,587 | 236,829,946 | 112,128 | 1,806,411 | 1,150,810 | 20,630,434 |
| Proceeds from Shares issued in connection with reorganization | — | — | 681,058 | 40,068,287 | — | — | — | — |
| Reinvestment of distributions | 171,659 | 8,278,156 | 747,215 | 43,376,695 | 475,857 | 7,505,606 | 406,710 | 7,668,528 |
| Cost of Shares redeemed | (1,662,243) | (81,487,749) | (4,885,257) | (274,179,208) | (1,428,392) | (23,463,024) | (3,509,211) | (63,649,856) |
| Change from Class Y Share Transactions | 243,257 | 11,594,214 | 657,603 | 46,095,720 | (840,407) | (14,151,007) | (1,951,691) | (35,350,894) |
| Institutional Class | ||||||||
| Proceeds from Shares issued | 2,329,621 | 114,094,791 | 4,978,600 | 278,659,299 | 1,114,175 | 18,174,159 | 2,165,174 | 39,064,241 |
| Reinvestment of distributions | 55,100 | 2,661,762 | 258,156 | 15,015,301 | 153,335 | 2,420,443 | 134,812 | 2,547,446 |
| Cost of Shares redeemed | (2,414,995) | (117,855,576) | (4,162,961) | (231,872,423) | (1,143,015) | (18,916,430) | (2,961,832) | (53,348,871) |
| Change from Institutional Class Share Transactions | (30,274) | (1,099,023) | 1,073,795 | 61,802,177 | 124,495 | 1,678,172 | (661,846) | (11,737,184) |
| Class R6 | ||||||||
| Proceeds from Shares issued | 23,899 | 1,157,366 | 18,091 | 948,609 | — | — | — | — |
| Reinvestment of distributions | 622 | 30,030 | 3 | 165 | — | — | — | — |
| Cost of Shares redeemed | (2,197) | (101,399) | (1,086) | (56,449) | — | — | — | — |
| Change from Class R6 Share Transactions | 22,324 | 1,085,997 | 17,008 | 892,325 | — | — | — | — |
| Change from Share Transactions | (849,677) | $(41,382,146) | 12,662,048 | $756,668,107 | (713,785) | $(12,456,655) | (2,608,116) | $(46,985,624) |
| ^ | The December 31, 2022 and June 30, 2022 Class C share amounts relating to Proceeds from Shares issued, Reinvestment of distributions, Cost of Shares redeemed, and Change from Class C Share Transactions as well as Change from Share transactions were updated to reflect the effect of a 1 for 0.379048 reverse stock split for Class C shares on October 14, 2022 (See Note 9 in the Notes to Financial Statements). |
| (A) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
| (B) | Effective July 16, 2021, Class W shares of the AIG Focused Alpha Large-Cap Fund were reorganized into Class Y shares of the Touchstone Large Cap Focused Fund. |
See accompanying Notes to Financial
Statements.
36
Statements of Changes in Net
Assets - Capital Stock Activity (Continued)
| Touchstone Large Company Growth Fund | Touchstone Small Company Fund^ | ||||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022 | ||||
| Shares | Dollars | Shares | Dollars | Shares | Dollars | Shares | Dollars |
| 6,465 | $246,663 | 23,624 | $1,073,254 | 1,549,273 | $7,533,122 | 3,089,369 | $18,264,217 |
| — | — | — | — | — | — | — | — |
| 3,229 | 115,696 | 14,010 | 686,500 | 2,345,714 | 11,470,539 | 16,920,322 | 96,615,036 |
| (3,907) | (150,888) | (9,825) | (486,656) | (5,856,801) | (28,583,290) | (12,245,547) | (70,525,090) |
| 5,787 | 211,471 | 27,809 | 1,273,098 | (1,961,814) | (9,579,629) | 7,764,144 | 44,354,163 |
| 699 | 26,752 | 1,391 | 59,787 | 208,945 | 628,633 | 306,024 | 1,898,466 |
| — | — | — | — | — | — | — | — |
| 238 | 7,965 | 1,916 | 88,481 | 87,922 | 427,301 | 1,470,185 | 8,416,613 |
| (577) | (19,022) | (5,874) | (246,977) | (6,945,897) | (2,896,522) | (1,013,412) | (6,546,227) |
| 360 | 15,695 | (2,567) | (98,709) | (6,649,030) | (1,840,588) | 2,012,403 | 3,768,852 |
| 2,790 | 103,812 | 27,974 | 1,444,993 | 7,538,570 | 42,279,262 | 9,325,160 | 60,109,420 |
| — | — | — | — | — | — | — | — |
| 7,001 | 256,507 | 96,442 | 4,817,277 | 982,602 | 5,522,224 | 6,441,959 | 42,001,576 |
| (184,112) | (6,925,822) | (245,654) | (11,562,989) | (4,903,687) | (27,205,312) | (11,049,942) | (71,888,664) |
| (174,321) | (6,565,503) | (121,238) | (5,300,719) | 3,617,485 | 20,596,174 | 4,717,177 | 30,222,332 |
| 596,292 | 22,672,460 | 1,440,464 | 70,878,080 | 362,725 | 2,015,053 | 1,642,193 | 10,324,078 |
| 115,186 | 4,259,572 | 791,411 | 39,847,570 | 86,528 | 487,153 | 405,783 | 2,645,704 |
| (790,438) | (29,986,309) | (2,253,830) | (104,112,452) | (380,232) | (2,123,285) | (483,053) | (3,305,409) |
| (78,960) | (3,054,277) | (21,955) | 6,613,198 | 69,021 | 378,921 | 1,564,923 | 9,664,373 |
| — | — | — | — | 6,359,269 | 32,058,209 | 14,482,860 | 87,457,173 |
| — | — | — | — | 284,288 | 1,461,242 | 1,747,162 | 10,413,085 |
| — | — | — | — | (5,289,173) | (26,829,368) | (14,245,220) | (85,824,430) |
| — | — | — | — | 1,354,384 | 6,690,083 | 1,984,802 | 12,045,828 |
| (247,134) | $(9,392,614) | (117,951) | $2,486,868 | (3,569,954) | $16,244,961 | 18,043,449 | $100,055,548 |
37
Statements of Changes in Net
Assets - Capital Stock Activity (Continued)
| Touchstone Value Fund | ||||
| For the Six Months Ended December 31, 2022 (Unaudited) | For the Year Ended June 30, 2022(A) | |||
| Shares | Dollars | Shares | Dollars | |
| Class A | ||||
| Proceeds from Shares issued | 423,239 | $4,325,359 | 711,431 | $7,911,031 |
| Proceeds from Shares issued in connection with reorganization | — | — | 16,002,448 | 178,897,865 |
| Reinvestment of distributions | 973,039 | 9,740,841 | 1,283,854 | 13,979,764 |
| Cost of Shares redeemed | (1,072,664) | (10,997,898) | (5,066,703) | (55,887,177) |
| Change from Class A Share Transactions | 323,614 | 3,068,302 | 12,931,030 | 144,901,483 |
| Class C | ||||
| Proceeds from Shares issued | 152,629 | 1,547,418 | 155,614 | 1,684,614 |
| Proceeds from Shares issued in connection with reorganization | — | — | 454,230 | 5,060,481 |
| Reinvestment of distributions | 32,663 | 325,575 | 40,098 | 434,249 |
| Cost of Shares redeemed | (207,371) | (2,022,032) | (241,736) | (2,688,461) |
| Change from Class C Share Transactions | (22,079) | (149,039) | 408,206 | 4,490,883 |
| Class Y(B) | ||||
| Proceeds from Shares issued | 2,186,442 | 23,214,983 | 1,271,629 | 14,268,625 |
| Proceeds from Shares issued in connection with reorganization | — | — | 493,844 | 5,545,569 |
| Reinvestment of distributions | 659,008 | 6,632,533 | 779,077 | 8,531,614 |
| Cost of Shares redeemed | (1,125,790) | (11,589,245) | (2,625,149) | (29,423,662) |
| Change from Class Y Share Transactions | 1,719,660 | 18,258,271 | (80,599) | (1,077,854) |
| Institutional Class | ||||
| Proceeds from Shares issued | 1,665,200 | 17,136,559 | 5,463,546 | 60,984,321 |
| Reinvestment of distributions | 1,301,656 | 13,045,143 | 1,915,258 | 20,913,854 |
| Cost of Shares redeemed | (5,843,432) | (61,597,999) | (7,279,817) | (80,473,980) |
| Change from Institutional Class Share Transactions | (2,876,576) | (31,416,297) | 98,987 | 1,424,195 |
| Class R6 | ||||
| Proceeds from Shares issued | 2,157,679 | 23,500,286 | 39,612 | 419,942 |
| Reinvestment of distributions | 143,433 | 1,439,300 | 192 | 1,961 |
| Cost of Shares redeemed | (212,875) | (2,158,809) | — | — |
| Change from Class R6 Share Transactions | 2,088,237 | 22,780,777 | 39,804 | 421,903 |
| Change from Share Transactions | 1,232,856 | $12,542,014 | 13,397,428 | $150,160,610 |
| (A) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
| (B) | Effective July 16, 2021, Class W shares of the AIG Strategic Value Fund were reorganized into Class Y shares of the Touchstone Value Fund. |
See accompanying Notes to Financial
Statements.
38
Financial Highlights
| Touchstone Balanced Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets | Ratio of gross expenses to average net assets | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 11/30/17 | $19.68 | $0.21 | $2.89 | $3.10 | $(0.25) | $ (0.13) | $(0.38) | $22.40 | 15.95% | $258,279 | 1.03% | 1.04% | 0.99% | 46% | ||||||||||||||
| 06/30/18(2)(3) | 22.40 | 0.16 | 0.22 | 0.38 | (0.18) | (1.06) | (1.24) | 21.54 | 1.72(4) | 239,056 | 1.01(5) | 1.07(5) | 1.24(5) | 119(4) | ||||||||||||||
| 06/30/19 | 21.54 | 0.32 | 1.73 | 2.05 | (0.34) | (1.07) | (1.41) | 22.18 | 10.13 | 244,037 | 1.01 | 1.09 | 1.49 | 81 | ||||||||||||||
| 06/30/20 | 22.18 | 0.27 | 1.85 | 2.12 | (0.28) | (2.41) | (2.69) | 21.61 | 10.09 | 250,298 | 1.01 | 1.07 | 1.25 | 135 | ||||||||||||||
| 06/30/21 | 21.61 | 0.16(6) | 5.47 | 5.63 | (0.15) | (1.57) | (1.72) | 25.52 | 26.92 | 322,009 | 1.01 | 1.03 | 0.66 | 60 | ||||||||||||||
| 06/30/22 | 25.52 | 0.14(6) | (3.42) | (3.28) | (0.15) | (0.61) | (0.76) | 21.48 | (13.32) | 521,933 | 0.99 | 0.99 | 0.54 | 92(7)(8) | ||||||||||||||
| 12/31/22(9) | 21.48 | 0.12 | 0.10 | 0.22 | (0.13) | — | (0.13) | 21.57 | 1.05(4) | 508,866 | 1.01(5) | 1.01(5) | 1.12(5) | 31(4) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 11/30/17 | $19.73 | $0.04 | $2.91 | $2.95 | $(0.09) | $ (0.13) | $(0.22) | $22.46 | 15.09% | $42,800 | 1.79% | 1.81% | 0.23% | 46% | ||||||||||||||
| 06/30/18(2)(3) | 22.46 | 0.06 | 0.22 | 0.28 | (0.05) | (1.06) | (1.11) | 21.63 | 1.25(4) | 39,769 | 1.78(5) | 1.86(5) | 0.47(5) | 119(4) | ||||||||||||||
| 06/30/19 | 21.63 | 0.15 | 1.75 | 1.90 | (0.17) | (1.07) | (1.24) | 22.29 | 9.33 | 34,380 | 1.78 | 1.89 | 0.72 | 81 | ||||||||||||||
| 06/30/20 | 22.29 | 0.11 | 1.86 | 1.97 | (0.13) | (2.41) | (2.54) | 21.72 | 9.23 | 44,174 | 1.78 | 1.88 | 0.48 | 135 | ||||||||||||||
| 06/30/21 | 21.72 | (0.03)(6) | 5.49 | 5.46 | (0.02) | (1.57) | (1.59) | 25.59 | 25.93 | 65,455 | 1.78 | 1.81 | (0.11) | 60 | ||||||||||||||
| 06/30/22 | 25.59 | (0.05)(6) | (3.42) | (3.47) | — | (0.61) | (0.61) | 21.51 | (13.96) | 73,906 | 1.75 | 1.75 | (0.22) | 92(7)(8) | ||||||||||||||
| 12/31/22(9) | 21.51 | 0.04 | 0.11 | 0.15 | (0.05) | — | (0.05) | 21.61 | 0.68(4) | 69,619 | 1.77(5) | 1.77(5) | 0.36(5) | 31(4) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 11/30/17(10) | $19.57 | $0.28 | $2.84 | $3.12 | $(0.30) | $ (0.13) | $(0.43) | $22.26 | 16.20% | $31,215 | 0.78% | 0.80% | 1.25% | 46% | ||||||||||||||
| 06/30/18(2)(3) | 22.26 | 0.19 | 0.22 | 0.41 | (0.22) | (1.06) | (1.28) | 21.39 | 1.86(4) | 30,612 | 0.81(5) | 0.90(5) | 1.44(5) | 119(4) | ||||||||||||||
| 06/30/19 | 21.39 | 0.35 | 1.72 | 2.07 | (0.38) | (1.07) | (1.45) | 22.01 | 10.33 | 60,638 | 0.81 | 0.88 | 1.69 | 81 | ||||||||||||||
| 06/30/20 | 22.01 | 0.32 | 1.84 | 2.16 | (0.33) | (2.41) | (2.74) | 21.43 | 10.35 | 94,921 | 0.81 | 0.87 | 1.45 | 135 | ||||||||||||||
| 06/30/21 | 21.43 | 0.20(6) | 5.41 | 5.61 | (0.19) | (1.57) | (1.76) | 25.28 | 27.12 | 197,877 | 0.81 | 0.81 | 0.86 | 60 | ||||||||||||||
| 06/30/22 | 25.28 | 0.18(6) | (3.38) | (3.20) | (0.19) | (0.61) | (0.80) | 21.28 | (13.13) | 155,159 | 0.79(11) | 0.75 | 0.74 | 92(7)(8) | ||||||||||||||
| 12/31/22(9) | 21.28 | 0.15 | 0.10 | 0.25 | (0.16) | — | (0.16) | 21.37 | 1.17(4) | 155,137 | 0.79(5) | 0.79(5) | 1.34(5) | 31(4) | ||||||||||||||
| Class R6 | ||||||||||||||||||||||||||||
| 06/30/22(12) | $26.15 | $0.13(6) | $(4.22) | $(4.09) | $(0.18) | $ (0.61) | $(0.79) | $21.27 | (16.08)%(4) | $112 | 0.64%(5) | 33.98%(5) | 0.89%(5) | 92%(7)(8) | ||||||||||||||
| 12/31/22(9) | 21.27 | 0.16 | 0.10 | 0.26 | (0.17) | — | (0.17) | 21.36 | 1.25(4) | 113 | 0.64(5) | 5.51(5) | 1.49(5) | 31(4) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | Represents the seven months ended June 30, 2018. |
| (3) | The Fund changed its fiscal year end from November 30 to June 30. |
| (4) | Not annualized. |
| (5) | Annualized. |
| (6) | The net investment income per share was based on average shares outstanding for the period. |
| (7) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (8) | Portfolio turnover excludes the purchases and sales of securities by the AIG Asset Allocation Fund and AIG Multi-Asset Allocation Fund acquired on July 16, 2021. If these transactions were included, portfolio turnover would have been higher. |
| (9) | Unaudited. |
| (10) | Effective October 28, 2017, Class I shares of the Sentinel Balanced Fund (the “Predecessor Fund”) were reorganized into Class Y shares of the Fund. |
| (11) | Net expenses include amounts recouped by the Adviser. |
| (12) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
See accompanying Notes to Financial
Statements.
39
Financial Highlights (Continued)
| Touchstone Core Municipal Bond Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets | Ratio of gross expenses to average net assets | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 06/30/18 | $11.55 | $0.33 | $(0.22) | $0.11 | $(0.33) | $ — | $(0.33) | $11.33 | 0.99% | $35,728 | 0.85% | 1.13% | 2.91% | 47% | ||||||||||||||
| 06/30/19 | 11.33 | 0.32 | 0.30 | 0.62 | (0.32) | — | (0.32) | 11.63 | 5.60 | 33,515 | 0.85 | 1.15 | 2.85 | 53 | ||||||||||||||
| 06/30/20 | 11.63 | 0.30 | 0.21 | 0.51 | (0.30) | (0.01) | (0.31) | 11.83 | 4.38 | 32,060 | 0.85 | 1.18 | 2.53 | 33 | ||||||||||||||
| 06/30/21 | 11.83 | 0.28 | 0.06 | 0.34 | (0.28) | — | (0.28) | 11.89 | 2.90 | 30,870 | 0.85 | 1.15 | 2.35 | 21 | ||||||||||||||
| 06/30/22 | 11.89 | 0.16 | (1.16) | (1.00) | (0.16) | (0.01) | (0.17) | 10.72 | (8.43) | 25,101 | 0.82 | 1.08 | 1.40 | 157 | ||||||||||||||
| 12/31/22(2) | 10.72 | 0.11 | (0.09) | 0.02 | (0.11) | — | (0.11) | 10.63 | 0.14(3) | 23,328 | 0.80(4) | 1.04(4) | 2.13(4) | 31(3) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 06/30/18 | $11.57 | $0.25 | $(0.24) | $0.01 | $(0.25) | $ — | $(0.25) | $11.33 | 0.06% | $5,363 | 1.60% | 2.01% | 2.16% | 47% | ||||||||||||||
| 06/30/19 | 11.33 | 0.23 | 0.33 | 0.56 | (0.24) | — | (0.24) | 11.65 | 4.97 | 2,756 | 1.60 | 2.08 | 2.10 | 53 | ||||||||||||||
| 06/30/20 | 11.65 | 0.21 | 0.21 | 0.42 | (0.21) | (0.01) | (0.22) | 11.85 | 3.61 | 2,050 | 1.60 | 2.32 | 1.78 | 33 | ||||||||||||||
| 06/30/21 | 11.85 | 0.18 | 0.07 | 0.25 | (0.19) | — | (0.19) | 11.91 | 2.13 | 1,180 | 1.60 | 2.27 | 1.60 | 21 | ||||||||||||||
| 06/30/22 | 11.91 | 0.08 | (1.17) | (1.09) | (0.08) | (0.01) | (0.09) | 10.73 | (9.27) | 943 | 1.57 | 2.47 | 0.65 | 157 | ||||||||||||||
| 12/31/22(2) | 10.73 | 0.08 | (0.11) | (0.03) | (0.07) | — | (0.07) | 10.63 | (0.23)(3) | 1,348 | 1.55(4) | 2.20(4) | 1.38(4) | 31(3) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 06/30/18 | $11.56 | $0.29 | $(0.16) | $0.13 | $(0.36) | $ — | $(0.36) | $11.33 | 1.15% | $4,596 | 0.60% | 1.16% | 3.16% | 47% | ||||||||||||||
| 06/30/19 | 11.33 | 0.35 | 0.31 | 0.66 | (0.35) | — | (0.35) | 11.64 | 5.96 | 3,031 | 0.60 | 1.05 | 3.10 | 53 | ||||||||||||||
| 06/30/20 | 11.64 | 0.33 | 0.22 | 0.55 | (0.33) | (0.01) | (0.34) | 11.85 | 4.73 | 2,616 | 0.60 | 1.31 | 2.78 | 33 | ||||||||||||||
| 06/30/21 | 11.85 | 0.31 | 0.05 | 0.36 | (0.31) | — | (0.31) | 11.90 | 3.07 | 3,449 | 0.60 | 1.25 | 2.60 | 21 | ||||||||||||||
| 06/30/22 | 11.90 | 0.19 | (1.15) | (0.96) | (0.19) | (0.01) | (0.20) | 10.74 | (8.19) | 2,740 | 0.57 | 1.11 | 1.65 | 157 | ||||||||||||||
| 12/31/22(2) | 10.74 | 0.13 | (0.09) | 0.04 | (0.13) | — | (0.13) | 10.65 | 0.37(3) | 2,917 | 0.55(4) | 1.07(4) | 2.38(4) | 31(3) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 06/30/18 | $11.56 | $0.30 | $(0.16) | $0.14 | $(0.37) | $ — | $(0.37) | $11.33 | 1.18% | $560 | 0.55% | 2.54% | 3.21% | 47% | ||||||||||||||
| 06/30/19 | 11.33 | 0.36 | 0.31 | 0.67 | (0.36) | — | (0.36) | 11.64 | 6.05 | 7,913 | 0.55 | 0.96 | 3.15 | 53 | ||||||||||||||
| 06/30/20 | 11.64 | 0.33 | 0.21 | 0.54 | (0.33) | (0.01) | (0.34) | 11.84 | 4.69 | 12,785 | 0.55 | 0.91 | 2.83 | 33 | ||||||||||||||
| 06/30/21 | 11.84 | 0.32 | 0.06 | 0.38 | (0.32) | — | (0.32) | 11.90 | 3.20 | 14,481 | 0.55 | 0.85 | 2.65 | 21 | ||||||||||||||
| 06/30/22 | 11.90 | 0.20 | (1.15) | (0.95) | (0.20) | (0.01) | (0.21) | 10.74 | (8.13) | 29,694 | 0.50 | 0.75 | 1.72 | 157 | ||||||||||||||
| 12/31/22(2) | 10.74 | 0.13 | (0.10) | 0.03 | (0.13) | — | (0.13) | 10.64 | 0.31(3) | 25,917 | 0.48(4) | 0.72(4) | 2.45(4) | 31(3) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | Unaudited. |
| (3) | Not annualized. |
| (4) | Annualized. |
See accompanying Notes to Financial
Statements.
40
Financial Highlights (Continued)
| Touchstone International Equity Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets | Ratio of gross expenses to average net assets | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 11/30/17 | $15.52 | $0.17 | $4.05 | $4.22 | $(0.10) | $ — | $(0.10) | $19.64 | 27.39% | $129,139 | 1.37% | 1.39% | 0.92% | 37% | ||||||||||||||
| 06/30/18(2)(3) | 19.64 | 0.36(4) | (0.94) | (0.58) | (0.21) | (0.70) | (0.91) | 18.15 | (3.23)(5) | 118,391 | 1.23(6) | 1.30(6) | 3.22(4)(6) | 26(5) | ||||||||||||||
| 06/30/19 | 18.15 | 0.20(7) | (0.57) | (0.37) | (0.26) | (1.87) | (2.13) | 15.65 | (0.78) | 106,870 | 1.30 | 1.37 | 1.26 | 43 | ||||||||||||||
| 06/30/20 | 15.65 | 0.08(7) | (0.98) | (0.90) | (0.19) | (0.63) | (0.82) | 13.93 | (6.28) | 77,744 | 1.29 | 1.40 | 0.57 | 45 | ||||||||||||||
| 06/30/21 | 13.93 | 0.09(7) | 4.94 | 5.03 | (0.08) | — | (0.08) | 18.88 | 36.16 | 88,022 | 1.36 | 1.37 | 0.56 | 31 | ||||||||||||||
| 06/30/22 | 18.88 | 0.18(7) | (3.44) | (3.26) | (0.08) | (2.24) | (2.32) | 13.30 | (18.87) | 76,671 | 1.36 | 1.40 | 1.08 | 45(8) | ||||||||||||||
| 12/31/22(9) | 13.30 | 0.05(7) | 0.45 | 0.50 | (0.21) | — | (0.21) | 13.59 | 3.78(5) | 75,653 | 1.36(6) | 1.48(6) | 0.74(6) | 17(5) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 11/30/17 | $14.66 | $(0.06) | $3.86 | $3.80 | $— | $ — | $— | $18.46 | 25.92% | $6,924 | 2.45% | 2.49% | (0.16)% | 37% | ||||||||||||||
| 06/30/18(2)(3) | 18.46 | 0.26(4) | (0.90) | (0.64) | — | (0.70) | (0.70) | 17.12 | (3.72)(5) | 6,737 | 2.18(6) | 2.25(6) | 2.27(4)(6) | 26(5) | ||||||||||||||
| 06/30/19 | 17.12 | 0.03(7) | (0.54) | (0.51) | (0.10) | (1.87) | (1.97) | 14.64 | (1.87) | 3,783 | 2.34 | 2.42 | 0.21 | 43 | ||||||||||||||
| 06/30/20 | 14.64 | (0.09)(7) | (0.93) | (1.02) | — | (0.63) | (0.63) | 12.99 | (7.41) | 2,073 | 2.49 | 2.74 | (0.63) | 45 | ||||||||||||||
| 06/30/21 | 12.99 | (0.04)(7) | 4.60 | 4.56 | (—)(10) | — | (—)(10) | 17.55 | 35.14 | 2,115 | 2.15 | 2.90 | (0.24) | 31 | ||||||||||||||
| 06/30/22 | 17.55 | 0.07(7) | (3.18) | (3.11) | (0.02) | (2.24) | (2.26) | 12.18 | (19.45) | 2,399 | 1.99 | 2.71 | 0.45 | 45(8) | ||||||||||||||
| 12/31/22(9) | 12.18 | 0.01(7) | 0.41 | 0.42 | (0.17) | — | (0.17) | 12.43 | 3.46(5) | 2,087 | 1.99(6) | 2.86(6) | 0.11(6) | 17(5) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 11/30/17(11) | $15.40 | $0.25 | $3.98 | $4.23 | $(0.18) | $ — | $(0.18) | $19.45 | 27.78% | $63,320 | 1.01% | 1.03% | 1.28% | 37% | ||||||||||||||
| 06/30/18(2)(3) | 19.45 | 0.40(4) | (0.93) | (0.53) | (0.29) | (0.70) | (0.99) | 17.93 | (3.05)(5) | 57,438 | 0.99(6) | 1.09(6) | 3.47(4)(6) | 26(5) | ||||||||||||||
| 06/30/19 | 17.93 | 0.25(7) | (0.57) | (0.32) | (0.30) | (1.87) | (2.17) | 15.44 | (0.47) | 42,120 | 0.99 | 1.12 | 1.57 | 43 | ||||||||||||||
| 06/30/20 | 15.44 | 0.13(7) | (0.97) | (0.84) | (0.24) | (0.63) | (0.87) | 13.73 | (6.03) | 23,835 | 0.99 | 1.15 | 0.87 | 45 | ||||||||||||||
| 06/30/21 | 13.73 | 0.15(7) | 4.88 | 5.03 | (0.11) | — | (0.11) | 18.65 | 36.71 | 27,903 | 0.99 | 1.19 | 0.93 | 31 | ||||||||||||||
| 06/30/22 | 18.65 | 0.23(7) | (3.40) | (3.17) | (0.13) | (2.24) | (2.37) | 13.11 | (18.61) | 20,430 | 0.99 | 1.19 | 1.45 | 45(8) | ||||||||||||||
| 12/31/22(9) | 13.11 | 0.07(7) | 0.46 | 0.53 | (0.24) | — | (0.24) | 13.40 | 4.03(5) | 19,402 | 0.99(6) | 1.26(6) | 1.11(6) | 17(5) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 11/30/17(12) | $18.91 | $0.02 | $0.53 | $0.55 | $— | $ — | $— | $19.46 | 2.91%(5) | $3 | 0.89%(6) | 1,921.18%(6) | 1.40%(6) | 37% | ||||||||||||||
| 06/30/18(2)(3) | 19.46 | 0.56(4) | (1.09) | (0.53) | (0.31) | (0.70) | (1.01) | 17.92 | (3.02)(5) | 2,260 | 0.89(6) | 1.63(6) | 3.57(4)(6) | 26(5) | ||||||||||||||
| 06/30/19 | 17.92 | 0.26(7) | (0.57) | (0.31) | (0.32) | (1.87) | (2.19) | 15.42 | (0.39) | 2,592 | 0.89 | 1.38 | 1.67 | 43 | ||||||||||||||
| 06/30/20 | 15.42 | 0.14(7) | (0.95) | (0.81) | (0.27) | (0.63) | (0.90) | 13.71 | (5.89) | 14,205 | 0.89 | 1.12 | 0.97 | 45 | ||||||||||||||
| 06/30/21 | 13.71 | 0.16(7) | 4.88 | 5.04 | (0.12) | — | (0.12) | 18.63 | 36.83 | 4,315 | 0.89 | 1.06 | 1.03 | 31 | ||||||||||||||
| 06/30/22 | 18.63 | 0.25(7) | (3.40) | (3.15) | (0.15) | (2.24) | (2.39) | 13.09 | (18.52) | 3,273 | 0.89 | 1.34 | 1.55 | 45(8) | ||||||||||||||
| 12/31/22(9) | 13.09 | 0.08(7) | 0.44 | 0.52 | (0.24) | — | (0.24) | 13.37 | 4.01(5) | 3,387 | 0.89(6) | 1.26(6) | 1.21(6) | 17(5) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | Represents the seven months ended June 30, 2018. |
| (3) | The Fund changed its fiscal year end from November 30 to June 30. |
| (4) | Reflects the impact of a special dividend that resulted in a one-time increase to net investment income. If the special dividend had not occurred, the ratio of net investment income to average net assets would have been lower by 1.54% for Class A, Class C, Class Y and Institutional Class shares and the net investment income per share would have been lower by $0.17, $0.16, $0.17 and $0.16 for Class A, Class C, Class Y and Institutional Class shares, respectively. |
| (5) | Not annualized. |
| (6) | Annualized. |
| (7) | The net investment income per share was based on average shares outstanding for the period. |
| (8) | Portfolio turnover excludes the purchases and sales of securities by the AIG International Dividend Strategy Fund acquired on July 16, 2021. If these transactions were included, portfolio turnover would have been higher. |
| (9) | Unaudited. |
| (10) | Less than $0.005 per share. |
| (11) | Effective October 28, 2017, Class I shares of the Sentinel Balanced Fund (the “Predecessor Fund”) were reorganized into Class Y shares of the Fund. |
| (12) | Represents the period from commencement of operations (October 30, 2017) through November 30, 2017. |
See accompanying Notes to Financial
Statements.
41
Financial Highlights (Continued)
| Touchstone International Growth Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets | Ratio of gross expenses to average net assets | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 06/30/18(2) | $11.61 | $(0.01) | $1.75 | $1.74 | $— | $ (0.24) | $(0.24) | $13.11 | 15.00% | $918 | 1.36% | 3.75% | (0.05)% | 109% | ||||||||||||||
| 06/30/19(2) | 13.11 | (0.04)(3) | (0.47) | (0.51) | — | (1.49) | (1.49) | 11.11 | (1.78) | 760 | 1.24 | 4.36 | (0.31) | 103 | ||||||||||||||
| 06/30/20(2) | 11.11 | (0.03)(3) | 0.60 | 0.57 | — | — | — | 11.68 | 5.07 | 777 | 1.24 | 4.17 | (0.26) | 74 | ||||||||||||||
| 06/30/21(2) | 11.68 | (0.10)(3) | 3.77 | 3.67 | — | — | — | 15.35 | 31.51 | 2,216 | 1.24 | 2.31 | (0.63) | 116(4) | ||||||||||||||
| 06/30/22 | 15.35 | (0.04) | (4.81) | (4.85) | — | — | — | 10.50 | (31.60) | 1,172 | 1.24 | 2.62 | (0.27) | 49 | ||||||||||||||
| 12/31/22(5) | 10.50 | (—)(3)(6) | (0.14) | (0.14) | (0.02) | — | (0.02) | 10.34 | (1.37)(7) | 1,153 | 1.24(8) | 2.60(8) | (0.04)(8) | 18(7) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 06/30/18(2) | $11.57 | $(0.05) | $1.69 | $1.64 | $— | $ (0.24) | $(0.24) | $12.97 | 14.14% | $436 | 2.10% | 5.06% | (0.79)% | 109% | ||||||||||||||
| 06/30/19(2) | 12.97 | (0.12)(3) | (0.48) | (0.60) | — | (1.49) | (1.49) | 10.88 | (2.52) | 185 | 1.99 | 6.35 | (1.06) | 103 | ||||||||||||||
| 06/30/20(2) | 10.88 | (0.11)(3) | 0.57 | 0.46 | — | — | — | 11.34 | 4.28 | 403 | 1.99 | 5.96 | (1.01) | 74 | ||||||||||||||
| 06/30/21(2) | 11.34 | (0.20)(3) | 3.67 | 3.47 | — | — | — | 14.81 | 30.55 | 1,316 | 1.99 | 3.43 | (1.38) | 116(4) | ||||||||||||||
| 06/30/22 | 14.81 | (0.14) | (4.61) | (4.75) | — | — | — | 10.06 | (32.07) | 787 | 1.99 | 3.62 | (1.02) | 49 | ||||||||||||||
| 12/31/22(5) | 10.06 | (0.04)(3) | (0.14) | (0.18) | — | — | — | 9.88 | (1.79)(7) | 647 | 1.99(8) | 3.56(8) | (0.79)(8) | 18(7) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 06/30/18(2) | $11.81 | $0.01 | $1.79 | $1.80 | $— | $ (0.24) | $(0.24) | $13.37 | 15.32% | $4,553 | 1.03% | 1.81% | 0.28% | 109% | ||||||||||||||
| 06/30/19(2) | 13.37 | (0.01)(3) | (0.49) | (0.50) | (0.01) | (1.51) | (1.52) | 11.35 | (1.53) | 2,341 | 0.99 | 1.89 | (0.06) | 103 | ||||||||||||||
| 06/30/20(2) | 11.35 | (—)(3)(6) | 0.60 | 0.60 | — | — | — | 11.95 | 5.28 | 867 | 0.99 | 2.50 | (0.01) | 74 | ||||||||||||||
| 06/30/21(2) | 11.95 | (0.06)(3) | 3.88 | 3.82 | — | — | — | 15.77 | 31.88 | 74,507 | 0.99 | 1.25 | (0.38) | 116(4) | ||||||||||||||
| 06/30/22 | 15.77 | (—)(6) | (4.95) | (4.95) | — | — | — | 10.82 | (31.39) | 47,845 | 0.99 | 1.31 | (0.02) | 49 | ||||||||||||||
| 12/31/22(5) | 10.82 | 0.01(3) | (0.15) | (0.14) | (0.03) | — | (0.03) | 10.65 | (1.29)(7) | 44,816 | 0.99(8) | 1.38(8) | 0.21(8) | 18(7) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 06/30/18(2) | $11.88 | $0.04 | $1.78 | $1.82 | $— | $ (0.24) | $(0.24) | $13.46 | 15.42% | $28,159 | 1.02% | 1.31% | 0.28% | 109% | ||||||||||||||
| 06/30/19(2) | 13.46 | 0.01(3) | (0.50) | (0.49) | (0.02) | (1.52) | (1.54) | 11.43 | (1.46) | 31,435 | 0.89 | 1.30 | 0.04 | 103 | ||||||||||||||
| 06/30/20(2) | 11.43 | 0.01(3) | 0.61 | 0.62 | (—)(6) | — | (—)(6) | 12.05 | 5.46 | 29,285 | 0.89 | 1.35 | 0.09 | 74 | ||||||||||||||
| 06/30/21(2) | 12.05 | (0.05)(3) | 3.91 | 3.86 | (0.02) | — | (0.02) | 15.89 | 32.00 | 23,334 | 0.89 | 1.20 | (0.28) | 116(4) | ||||||||||||||
| 06/30/22 | 15.89 | 0.03 | (5.01) | (4.98) | (—)(6) | — | (—)(6) | 10.91 | (31.34) | 11,224 | 0.89 | 1.32 | 0.08 | 49 | ||||||||||||||
| 12/31/22(5) | 10.91 | 0.02(3) | (0.15) | (0.13) | (0.04) | — | (0.04) | 10.74 | (1.23)(7) | 10,926 | 0.89(8) | 1.37(8) | 0.31(8) | 18(7) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | During the year ended June 30, 2021, the Fund effected the following stock split effective the close of business September 11, 2020: 1.9160 for 1 for Class A shares, 1.9095 for 1 for Class C shares, 1.8839 for 1 for Class Y shares and 1.8777 for 1 for Institutional Class shares. All historical per share information has been retroactively adjusted to reflect this stock split. |
| (3) | The net investment income (loss) per share was based on average shares outstanding for the period. |
| (4) | Portfolio turnover excludes the purchases and sales of securities of the International Small Cap Fund acquired on September 11, 2020. If these transactions were included, portfolio turnover would have been higher. |
| (5) | Unaudited. |
| (6) | Less than $0.005 per share. |
| (7) | Not annualized. |
| (8) | Annualized. |
See accompanying Notes to Financial
Statements.
42
Financial Highlights (Continued)
| Touchstone Large Cap Focused Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets(2) | Ratio of gross expenses to average net assets(3) | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 11/30/17 | $42.28 | $0.45 | $8.99 | $9.44 | $(0.51) | $ (2.46) | $(2.97) | $48.75 | 23.67% | $1,321,506 | 1.02% | 1.02% | 0.98% | 12%(4) | ||||||||||||||
| 06/30/18(5)(6) | 48.75 | 0.23 | 1.85 | 2.08 | (0.07) | (6.96) | (7.03) | 43.80 | 4.74(7) | 1,218,721 | 0.97(8) | 1.09(8) | 0.88(8) | 9(4)(7) | ||||||||||||||
| 06/30/19 | 43.80 | 0.38(9) | 3.72 | 4.10 | (0.27) | (4.26) | (4.53) | 43.37 | 10.51 | 1,170,490 | 0.97 | 1.09 | 0.88 | 15(4) | ||||||||||||||
| 06/30/20 | 43.37 | 0.27 | 3.78 | 4.05 | (0.27) | (4.85) | (5.12) | 42.30 | 9.54 | 1,120,305 | 1.01 | 1.10 | 0.66 | 29(4) | ||||||||||||||
| 06/30/21 | 42.30 | 0.08(9) | 19.10 | 19.18 | (0.09) | (2.71) | (2.80) | 58.68 | 46.68 | 1,541,127 | 1.01 | 1.05 | 0.15 | 16(4) | ||||||||||||||
| 06/30/22 | 58.68 | 0.04 | (7.56) | (7.52) | (0.05) | (3.91) | (3.96) | 47.20 | (14.07) | 1,736,900 | 0.99 | 0.99 | 0.13 | 27(4)(10) | ||||||||||||||
| 12/31/22(11) | 47.20 | 0.09 | 1.17 | 1.26 | (0.08) | (0.68) | (0.76) | 47.70 | 2.63(7) | 1,706,986 | 1.02(8) | 1.04(8) | 0.34(8) | 2(4)(7) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 11/30/17 | $40.44 | $—(12) | $8.67 | $8.67 | $(0.17) | $ (2.46) | $(2.63) | $46.48 | 22.69% | $74,122 | 1.82% | 1.82% | 0.18% | 12%(4) | ||||||||||||||
| 06/30/18(5)(6) | 46.48 | 0.03 | 1.74 | 1.77 | — | (6.96) | (6.96) | 41.29 | 4.24(7) | 67,599 | 1.78(8) | 1.89(8) | 0.07(8) | 9(4)(7) | ||||||||||||||
| 06/30/19 | 41.29 | 0.03(9) | 3.50 | 3.53 | — | (4.26) | (4.26) | 40.56 | 9.61 | 47,838 | 1.79 | 1.90 | 0.07 | 15(4) | ||||||||||||||
| 06/30/20 | 40.56 | (0.19) | 3.64 | 3.45 | — | (4.85) | (4.85) | 39.16 | 8.69 | 37,450 | 1.82 | 1.94 | (0.15) | 29(4) | ||||||||||||||
| 06/30/21 | 39.16 | (0.30)(9) | 17.58 | 17.28 | — | (2.71) | (2.71) | 53.73 | 45.49 | 41,645 | 1.80 | 1.88 | (0.64) | 16(4) | ||||||||||||||
| 06/30/22 | 53.73 | (0.02) | (7.18) | (7.20) | — | (3.91) | (3.91) | 42.62 | (14.78) | 49,115 | 1.80 | 1.80 | (0.68) | 27(4)(10) | ||||||||||||||
| 12/31/22(11) | 42.62 | (0.10) | 1.07 | 0.97 | — | (0.68) | (0.68) | 42.91 | 2.24(7) | 46,365 | 1.81(8) | 1.86(8) | (0.45)(8) | 2(4)(7) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 11/30/17(13) | $42.26 | $0.56 | $8.99 | $9.55 | $(0.63) | $ (2.46) | $(3.09) | $48.72 | 24.03% | $438,732 | 0.74% | 0.75% | 1.26% | 12%(4) | ||||||||||||||
| 06/30/18(5)(6) | 48.72 | 0.29 | 1.84 | 2.13 | (0.21) | (6.96) | (7.17) | 43.68 | 4.85(7) | 394,077 | 0.74(8) | 0.90(8) | 1.11(8) | 9(4)(7) | ||||||||||||||
| 06/30/19 | 43.68 | 0.48(9) | 3.71 | 4.19 | (0.37) | (4.26) | (4.63) | 43.24 | 10.81 | 413,137 | 0.73 | 0.89 | 1.13 | 15(4) | ||||||||||||||
| 06/30/20 | 43.24 | 0.40 | 3.76 | 4.16 | (0.37) | (4.85) | (5.22) | 42.18 | 9.84 | 352,103 | 0.75 | 0.91 | 0.92 | 29(4) | ||||||||||||||
| 06/30/21 | 42.18 | 0.22(9) | 19.05 | 19.27 | (0.16) | (2.71) | (2.87) | 58.58 | 47.07 | 575,053 | 0.73 | 0.86 | 0.43 | 16(4) | ||||||||||||||
| 06/30/22 | 58.58 | 0.20 | (7.57) | (7.37) | (0.16) | (3.91) | (4.07) | 47.14 | (13.86) | 493,825 | 0.73 | 0.78 | 0.39 | 27(4)(10) | ||||||||||||||
| 12/31/22(11) | 47.14 | 0.15 | 1.18 | 1.33 | (0.16) | (0.68) | (0.84) | 47.63 | 2.79(7) | 510,483 | 0.74(8) | 0.83(8) | 0.62(8) | 2(4)(7) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 11/30/17(14) | $42.32 | $0.61 | $9.01 | $9.62 | $(0.67) | $ (2.46) | $(3.13) | $48.81 | 24.14% | $44,738 | 0.68% | 0.70% | 1.32% | 12%(4) | ||||||||||||||
| 06/30/18(5)(6) | 48.81 | 0.34 | 1.80 | 2.14 | (0.24) | (6.96) | (7.20) | 43.75 | 4.93(7) | 46,683 | 0.67(8) | 0.88(8) | 1.18(8) | 9(4)(7) | ||||||||||||||
| 06/30/19 | 43.75 | 0.51(9) | 3.71 | 4.22 | (0.40) | (4.26) | (4.66) | 43.31 | 10.87 | 100,473 | 0.66 | 0.85 | 1.20 | 15(4) | ||||||||||||||
| 06/30/20 | 43.31 | 0.35 | 3.83 | 4.18 | (0.40) | (4.85) | (5.25) | 42.24 | 9.87 | 127,963 | 0.71 | 0.88 | 0.96 | 29(4) | ||||||||||||||
| 06/30/21 | 42.24 | 0.23(9) | 19.10 | 19.33 | (0.17) | (2.71) | (2.88) | 58.69 | 47.14 | 207,274 | 0.70 | 0.81 | 0.46 | 16(4) | ||||||||||||||
| 06/30/22 | 58.69 | 0.26 | (7.63) | (7.37) | (0.18) | (3.91) | (4.09) | 47.23 | (13.85) | 217,531 | 0.70 | 0.73 | 0.42 | 27(4)(10) | ||||||||||||||
| 12/31/22(11) | 47.23 | 0.16 | 1.18 | 1.34 | (0.17) | (0.68) | (0.85) | 47.72 | 2.80(7) | 218,330 | 0.71(8) | 0.76(8) | 0.65(8) | 2(4)(7) | ||||||||||||||
| Class R6 | ||||||||||||||||||||||||||||
| 06/30/22(15) | $61.99 | $0.22 | $(10.89) | $(10.67) | $(0.16) | $ (3.91) | $(4.07) | $47.25 | (18.43)%(7) | $804 | 0.66%(8) | 3.02%(8) | 0.47%(8) | 27%(4)(10) | ||||||||||||||
| 12/31/22(11) | 47.25 | 0.11 | 1.23 | 1.34 | (0.17) | (0.68) | (0.85) | 47.74 | 2.80(7) | 1,878 | 0.67(8) | 1.16(8) | 0.69(8) | 2(4)(7) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | The ratios shown include liquidity provider expenses. The ratio of net expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.00%, 0.98%, 1.00%, 0.98%, 0.96%, 0.95% and 1.02%; for Class C shares was 1.79%, 1.79%, 1.79%, 1.79%, 1.78%, 1.76% and 1.82%; for Class Y shares was 0.72%, 0.72%, 0.72%, 0.72%, 0.72%, 0.72% and 0.74%; for Institutional Class shares was 0.69%, 0.69%, 0.69%, 0.68%, 0.65%, 0.65% and 0.68% for the six months ended December 31, 2022, the years ended June 30, 2022, 2021, 2020 and 2019, the seven months ended June 30, 2018 and the year ended November 30, 2017, respectively; and for Class R6 shares was 0.65% and 0.65% for the six months ended December 31, 2022 and the period ended June 30, 2022. |
| (3) | The ratios shown include liquidity provider expenses. The ratio of gross expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.02%, 0.98%, 1.04%, 1.07%, 1.08%, 1.07% and 1.02%; for Class C shares was 1.84%, 1.79%, 1.87%, 1.91%, 1.89%, 1.87% and 1.82%; for Class Y shares was 0.81% 0.77%, 0.85%, 0.88%, 0.88%, 0.88% and 0.75%; for Institutional Class shares was 0.74%, 0.72%, 0.80%, 0.85%, 0.84%, 0.86% and 0.70% for the six months ended December 31, 2022, the years ended June 30, 2022, 2021, 2020 and 2019, the seven months ended June 30, 2018 and the year ended November 30, 2017, respectively; and for Class R6 shares was 1.14% and 3.01% for the six months ended December 31, 2022 and the period ended June 30, 2022. |
| (4) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (5) | Represents the seven months ended June 30, 2018. |
| (6) | The Fund changed its fiscal year end from November 30 to June 30. |
| (7) | Not annualized. |
| (8) | Annualized. |
| (9) | The net investment income (loss) per share was based on average shares outstanding for the period. |
| (10) | Portfolio turnover excludes the purchases and sales of securities of the AIG Focused Alpha Large-Cap Fund acquired on July 16, 2021. If these transactions were included, portfolio turnover would have been higher. |
| (11) | Unaudited. |
| (12) | Less than $0.005 per share. |
| (13) | Effective October 28, 2017, Class I shares of the Sentinel International Equity Fund (the “Predecessor Fund”) were reorganized into Class Y shares of the Fund. |
| (14) | Effective October 30, 2017, Class R6 shares of the Predecessor Fund were reorganized into Institutional Class shares of the Fund. |
| (15) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
See accompanying Notes to Financial
Statements.
43
Financial Highlights (Continued)
| Touchstone Large Cap Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets(2) | Ratio of gross expenses to average net assets(3) | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 06/30/18 | $11.96 | $0.09 | $1.27 | $1.36 | $(0.05) | $ — | $(0.05) | $13.27 | 11.35% | $2,975 | 1.12% | 1.50% | 0.48% | 10% | ||||||||||||||
| 06/30/19 | 13.27 | 0.09(4) | 0.83 | 0.92 | (0.08) | — | (0.08) | 14.11 | 7.04 | 4,067 | 1.11 | 1.67 | 0.63 | 19(5) | ||||||||||||||
| 06/30/20 | 14.11 | 0.15 | (0.24) | (0.09) | (0.11) | (0.87) | (0.98) | 13.04 | (1.18) | 2,989 | 1.03 | 1.91 | 1.03 | 20 | ||||||||||||||
| 06/30/21 | 13.04 | 0.11 | 4.83 | 4.94 | (0.12) | — | (0.12) | 17.86 | 38.06 | 4,278 | 1.04 | 1.53 | 0.75 | 15(5) | ||||||||||||||
| 06/30/22 | 17.86 | 0.08 | (2.03) | (1.95) | (0.12) | (0.40) | (0.52) | 15.39 | (11.44) | 4,510 | 1.05 | 1.48 | 0.51 | 12(5) | ||||||||||||||
| 12/31/22(6) | 15.39 | 0.03 | 0.74 | 0.77 | (0.02) | (0.57) | (0.59) | 15.57 | 4.97(7) | 5,147 | 1.05(8) | 1.42(8) | 0.63(8) | 6(5)(7) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 06/30/18 | $11.80 | $(0.04) | $1.28 | $1.24 | $— | $ — | $— | $13.04 | 10.51% | $7,849 | 1.87% | 2.12% | (0.27)% | 10% | ||||||||||||||
| 06/30/19 | 13.04 | (0.02)(4) | 0.83 | 0.81 | — | — | — | 13.85 | 6.21 | 7,372 | 1.86 | 2.13 | (0.12) | 19(5) | ||||||||||||||
| 06/30/20 | 13.85 | 0.01 | (0.20) | (0.19) | — | (0.87) | (0.87) | 12.79 | (1.89) | 5,376 | 1.78 | 2.09 | 0.27 | 20 | ||||||||||||||
| 06/30/21 | 12.79 | (0.10) | 4.84 | 4.74 | — | — | — | 17.53 | 37.06 | 4,328 | 1.79 | 2.03 | (—)(9) | 15(5) | ||||||||||||||
| 06/30/22 | 17.53 | (0.10) | (1.96) | (2.06) | — | (0.40) | (0.40) | 15.07 | (12.15) | 2,995 | 1.80 | 2.12 | (0.24) | 12(5) | ||||||||||||||
| 12/31/22(6) | 15.07 | (0.07) | 0.78 | 0.71 | — | (0.57) | (0.57) | 15.21 | 4.65(7) | 2,486 | 1.80(8) | 2.14(8) | (0.12)(8) | 6(5)(7) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 06/30/18 | $12.00 | $0.10 | $1.30 | $1.40 | $(0.09) | $ — | $(0.09) | $13.31 | 11.62% | $231,984 | 0.87% | 0.99% | 0.73% | 10% | ||||||||||||||
| 06/30/19 | 13.31 | 0.12(4) | 0.84 | 0.96 | (0.13) | — | (0.13) | 14.14 | 7.31 | 213,650 | 0.86 | 0.99 | 0.88 | 19(5) | ||||||||||||||
| 06/30/20 | 14.14 | 0.17 | (0.22) | (0.05) | (0.15) | (0.87) | (1.02) | 13.07 | (0.93) | 206,798 | 0.78 | 0.90 | 1.28 | 20 | ||||||||||||||
| 06/30/21 | 13.07 | 0.16 | 4.83 | 4.99 | (0.18) | — | (0.18) | 17.88 | 38.39 | 270,305 | 0.79 | 0.88 | 1.00 | 15(5) | ||||||||||||||
| 06/30/22 | 17.88 | 0.15 | (2.05) | (1.90) | (0.16) | (0.40) | (0.56) | 15.42 | (11.20) | 202,913 | 0.80 | 0.88 | 0.76 | 12(5) | ||||||||||||||
| 12/31/22(6) | 15.42 | 0.08 | 0.72 | 0.80 | (0.08) | (0.57) | (0.65) | 15.57 | 5.10(7) | 191,847 | 0.80(8) | 0.91(8) | 0.88(8) | 6(5)(7) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 06/30/18 | $12.02 | $0.10 | $1.31 | $1.41 | $(0.10) | $ — | $(0.10) | $13.33 | 11.70% | $124,759 | 0.77% | 0.91% | 0.83% | 10% | ||||||||||||||
| 06/30/19 | 13.33 | 0.14(4) | 0.83 | 0.97 | (0.14) | — | (0.14) | 14.16 | 7.43 | 59,211 | 0.77 | 0.92 | 0.98 | 19(5) | ||||||||||||||
| 06/30/20 | 14.16 | 0.15 | (0.19) | (0.04) | (0.16) | (0.87) | (1.03) | 13.09 | (0.83) | 60,402 | 0.68 | 0.84 | 1.38 | 20 | ||||||||||||||
| 06/30/21 | 13.09 | 0.16 | 4.86 | 5.02 | (0.20) | — | (0.20) | 17.91 | 38.59 | 90,358 | 0.69 | 0.82 | 1.10 | 15(5) | ||||||||||||||
| 06/30/22 | 17.91 | 0.18 | (2.08) | (1.90) | (0.17) | (0.40) | (0.57) | 15.44 | (11.15) | 67,679 | 0.70 | 0.82 | 0.86 | 12(5) | ||||||||||||||
| 12/31/22(6) | 15.44 | 0.07 | 0.74 | 0.81 | (0.10) | (0.57) | (0.67) | 15.58 | 5.20(7) | 70,217 | 0.70(8) | 0.84(8) | 0.98(8) | 6(5)(7) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | The ratios shown include liquidity provider expenses. The ratio of net expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.03%, 1.03% and 1.03%; for Class C shares was 1.78%, 1.78% and 1.78%; for Class Y shares was 0.78%, 0.78% and 0.78%; and for Institutional Class shares was 0.68%, 0.68% and 0.68% for the six months ended December 31,2022 and for the years ended June 30, 2022 and 2021, respectively. |
| (3) | The ratios shown include liquidity provider expenses. The ratio of gross expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.40%, 1.46% and 1.52%; for Class C shares was 2.12%, 2.10% and 2.02%; for Class Y shares was 0.89%, 0.86% and 0.87%; and for Institutional Class shares was 0.82%, 0.80% and 0.81% for the six months ended December 31,2022 and for the years ended June 30, 2022 and 2021, respectively. |
| (4) | The net investment income per share was based on average shares outstanding for the period. |
| (5) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (6) | Unaudited. |
| (7) | Not annualized. |
| (8) | Annualized. |
| (9) | Less than 0.005%. |
See accompanying Notes to Financial
Statements.
44
Financial Highlights (Continued)
| Touchstone Large Company Growth Fund | ||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment loss | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets(2) | Ratio of gross expenses to average net assets(3) | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | |||||||||||||
| Class A | ||||||||||||||||||||||||||
| 06/30/18 | $35.52 | $(0.24) | $7.19 | $6.95 | $ (1.14) | $(1.14) | $41.33 | 19.75% | $3,417 | 1.23% | 1.67% | (0.63)% | 44% | |||||||||||||
| 06/30/19 | 41.33 | (0.56) | 4.42 | 3.86 | (2.69) | (2.69) | 42.50 | 10.39 | 1,425 | 1.23 | 2.01 | (0.59) | 41 | |||||||||||||
| 06/30/20 | 42.50 | (0.08) | 8.19 | 8.11 | (3.15) | (3.15) | 47.46 | 20.07 | 2,112 | 1.07 | 2.28 | 0.60 | 30 | |||||||||||||
| 06/30/21 | 47.46 | (0.15) | 16.56 | 16.41 | (6.61) | (6.61) | 57.26 | 37.33 | 3,617 | 1.06 | 1.59 | (0.71) | 36(4) | |||||||||||||
| 06/30/22 | 57.26 | (0.18) | (10.40) | (10.58) | (10.52) | (10.52) | 36.16 | (23.29) | 3,290 | 1.07 | 1.58 | (0.61) | 41(4) | |||||||||||||
| 12/31/22(5) | 36.16 | (0.09)(6) | (0.03) | (0.12) | (1.23) | (1.23) | 34.81 | (0.42)(7) | 3,368 | 1.07(8) | 1.54(8) | (0.46)(8) | 22(4)(7) | |||||||||||||
| Class C | ||||||||||||||||||||||||||
| 06/30/18 | $35.29 | $(0.30) | $6.89 | $6.59 | $ (1.14) | $(1.14) | $40.74 | 18.88% | $236 | 1.98% | 8.12% | (1.38)% | 44% | |||||||||||||
| 06/30/19 | 40.74 | (0.40) | 3.87 | 3.47 | (2.69) | (2.69) | 41.52 | 9.55 | 396 | 1.98 | 4.38 | (1.34) | 41 | |||||||||||||
| 06/30/20 | 41.52 | (0.31) | 7.87 | 7.56 | (3.15) | (3.15) | 45.93 | 19.19 | 592 | 1.82 | 4.64 | (1.35) | 30 | |||||||||||||
| 06/30/21 | 45.93 | (1.42) | 16.81 | 15.39 | (6.61) | (6.61) | 54.71 | 36.28 | 473 | 1.81 | 3.39 | (1.46) | 36(4) | |||||||||||||
| 06/30/22 | 54.71 | (1.24) | (9.03) | (10.27) | (10.52) | (10.52) | 33.92 | (23.87) | 206 | 1.82 | 4.24 | (1.36) | 41(4) | |||||||||||||
| 12/31/22(5) | 33.92 | (0.21)(6) | (0.03) | (0.24) | (1.23) | (1.23) | 32.45 | (0.80)(7) | 209 | 1.82(8) | 6.01(8) | (1.21)(8) | 22(4)(7) | |||||||||||||
| Class Y | ||||||||||||||||||||||||||
| 06/30/18 | $35.60 | $(0.13) | $7.20 | $7.07 | $ (1.14) | $(1.14) | $41.53 | 20.02% | $15,961 | 0.98% | 1.12% | (0.38)% | 44% | |||||||||||||
| 06/30/19 | 41.53 | (0.12) | 4.10 | 3.98 | (2.69) | (2.69) | 42.82 | 10.66 | 19,580 | 0.98 | 1.16 | (0.34) | 41 | |||||||||||||
| 06/30/20 | 42.82 | (0.12) | 8.42 | 8.30 | (3.15) | (3.15) | 47.97 | 20.38 | 24,062 | 0.82 | 1.04 | (0.35) | 30 | |||||||||||||
| 06/30/21 | 47.97 | (0.26) | 17.00 | 16.74 | (6.61) | (6.61) | 58.10 | 37.64 | 28,952 | 0.81 | 0.96 | (0.46) | 36(4) | |||||||||||||
| 06/30/22 | 58.10 | (0.18) | (10.49) | (10.67) | (10.52) | (10.52) | 36.91 | (23.09) | 13,917 | 0.82 | 0.97 | (0.36) | 41(4) | |||||||||||||
| 12/31/22(5) | 36.91 | (0.04)(6) | (0.04) | (0.08) | (1.23) | (1.23) | 35.60 | (0.30)(7) | 7,217 | 0.82(8) | 1.07(8) | (0.21)(8) | 22(4)(7) | |||||||||||||
| Institutional Class | ||||||||||||||||||||||||||
| 06/30/18 | $35.63 | $(0.11) | $7.23 | $7.12 | $ (1.14) | $(1.14) | $41.61 | 20.17% | $224,379 | 0.88% | 0.98% | (0.28)% | 44% | |||||||||||||
| 06/30/19 | 41.61 | (0.10) | 4.13 | 4.03 | (2.69) | (2.69) | 42.95 | 10.74 | 204,391 | 0.88 | 0.99 | (0.24) | 41 | |||||||||||||
| 06/30/20 | 42.95 | (0.12) | 8.50 | 8.38 | (3.15) | (3.15) | 48.18 | 20.51 | 199,601 | 0.73 | 0.86 | (0.25) | 30 | |||||||||||||
| 06/30/21 | 48.18 | (0.21) | 17.10 | 16.89 | (6.61) | (6.61) | 58.46 | 37.80 | 229,690 | 0.71 | 0.85 | (0.36) | 36(4) | |||||||||||||
| 06/30/22 | 58.46 | (0.14) | (10.58) | (10.72) | (10.52) | (10.52) | 37.22 | (23.03) | 145,441 | 0.72 | 0.84 | (0.26) | 41(4) | |||||||||||||
| 12/31/22(5) | 37.22 | (0.02)(6) | (0.04) | (0.06) | (1.23) | (1.23) | 35.93 | (0.25)(7) | 137,559 | 0.72(8) | 0.88(8) | (0.11)(8) | 22(4)(7) | |||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | The ratios shown include liquidity provider expenses. The ratio of net expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.04%, 1.04% and 1.04%; for Class C shares was 1.79%, 1.79% and 1.79%; for Class Y shares was 0.79%, 0.79% and 0.79%; and for Institutional Class shares was 0.69%, 0.69% and 0.69% for the six months ended December 31,2022 and for the years ended June 30, 2022 and 2021, respectively. |
| (3) | The ratios shown include liquidity provider expenses. The ratio of gross expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.51%, 1.55% and 1.57%; for Class C shares was 5.98%, 4.21% and 3.37%; for Class Y shares was 1.04%, 0.94% and 0.94%; and for Institutional Class shares was 0.85%, 0.81% and 0.83% for the six months ended December 31,2022 and for the years ended June 30, 2022 and 2021, respectively. |
| (4) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (5) | Unaudited. |
| (6) | The net investment income per share was based on average shares outstanding for the period. |
| (7) | Not annualized. |
| (8) | Annualized. |
See accompanying Notes to Financial
Statements.
45
Financial Highlights (Continued)
| Touchstone Small Company Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income (loss) | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets(2) | Ratio of gross expenses to average net assets(3) | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 11/30/17 | $5.19 | $(0.02) | $0.89 | $0.87 | $— | $ (0.42) | $(0.42) | $5.64 | 17.95% | $677,055 | 1.18% | 1.18% | (0.49)% | 82% | ||||||||||||||
| 06/30/18(4)(5) | 5.64 | (0.01) | 0.37 | 0.36 | — | (0.47) | (0.47) | 5.53 | 6.89(6) | 661,866 | 1.10(7) | 1.18(7) | (0.26)(7) | 30(6) | ||||||||||||||
| 06/30/19 | 5.53 | (0.01) | (0.07) | (0.08) | — | (0.62) | (0.62) | 4.83 | (0.73) | 589,664 | 1.12 | 1.20 | (0.26) | 94(8)(9) | ||||||||||||||
| 06/30/20 | 4.83 | (0.02) | (0.47) | (0.49) | — | (0.28) | (0.28) | 4.06 | (10.82) | 420,822 | 1.15 | 1.24 | (0.32) | 81 | ||||||||||||||
| 06/30/21 | 4.06 | (0.03) | 2.65 | 2.62 | — | (0.01) | (0.01) | 6.67 | 64.45 | 608,513 | 1.20 | 1.20 | (0.45) | 80(8) | ||||||||||||||
| 06/30/22 | 6.67 | (0.02)(10) | (0.95) | (0.97) | — | (1.14) | (1.14) | 4.56 | (17.95) | 451,081 | 1.17 | 1.17 | (0.31) | 70(8) | ||||||||||||||
| 12/31/22(11) | 4.56 | (—)(10)(12) | 0.39 | 0.39 | — | (0.12) | (0.12) | 4.83 | 8.60(6) | 468,615 | 1.19(7) | 1.19(7) | (0.02)(7) | 39(6)(8) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 11/30/17(13) | $8.94 | $(0.26) | $1.66 | $1.40 | $— | $ (1.11) | $(1.11) | $9.23 | 17.36% | $104,051 | 1.92% | 1.92% | (1.23)% | 82% | ||||||||||||||
| 06/30/18(4)(5)(13) | 9.23 | (0.05) | 0.58 | 0.53 | — | (1.24) | (1.24) | 8.52 | 6.51(6) | 97,136 | 1.85(7) | 1.93(7) | (1.02)(7) | 30(6) | ||||||||||||||
| 06/30/19(13) | 8.52 | (0.13) | (0.10) | (0.23) | — | (1.64) | (1.64) | 6.65 | (1.65) | 39,390 | 1.88 | 1.96 | (1.01) | 94(8)(9) | ||||||||||||||
| 06/30/20(13) | 6.65 | (0.13) | (0.53) | (0.66) | — | (0.74) | (0.74) | 5.25 | (11.22) | 21,204 | 1.95 | 2.07 | (1.12) | 81 | ||||||||||||||
| 06/30/21(13) | 5.25 | (0.11) | 3.41 | 3.30 | — | (0.03) | (0.03) | 8.52 | 62.65 | 26,123 | 1.97 | 2.05 | (1.22) | 80(8) | ||||||||||||||
| 06/30/22(13) | 8.52 | (0.08)(10) | (0.89) | (0.97) | — | (3.01) | (3.01) | 4.54 | (18.70) | 17,385 | 1.97 | 2.02 | (1.11) | 70(8) | ||||||||||||||
| 12/31/22(11)(13) | 4.54 | (0.01)(10) | 0.39 | 0.38 | — | (0.12) | (0.12) | 4.80 | 8.48(6) | 16,516 | 1.96(7) | 2.06(7) | (0.78)(7) | 39(6)(8) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 11/30/17(14) | $5.56 | $(0.06) | $1.02 | $0.96 | $— | $ (0.42) | $(0.42) | $6.10 | 18.41% | $388,404 | 0.85% | 0.85% | (0.16)% | 82% | ||||||||||||||
| 06/30/18(4)(5) | 6.10 | (—)(12) | 0.41 | 0.41 | — | (0.47) | (0.47) | 6.04 | 7.21(6) | 383,050 | 0.84(7) | 0.92(7) | (0.01)(7) | 30(6) | ||||||||||||||
| 06/30/19 | 6.04 | (—)(12) | (0.09) | (0.09) | (—)(12) | (0.62) | (0.62) | 5.33 | (0.79) | 326,021 | 0.87 | 0.95 | —(12) | 94(8)(9) | ||||||||||||||
| 06/30/20 | 5.33 | (—)(12) | (0.52) | (0.52) | — | (0.28) | (0.28) | 4.53 | (10.35) | 189,336 | 0.89 | 0.98 | (0.06) | 81 | ||||||||||||||
| 06/30/21 | 4.53 | (0.01) | 2.94 | 2.93 | (—)(12) | (0.01) | (0.01) | 7.45 | 64.61 | 282,428 | 0.91 | 0.99 | (0.16) | 80(8) | ||||||||||||||
| 06/30/22 | 7.45 | (—)(10)(12) | (1.10) | (1.10) | — | (1.14) | (1.14) | 5.21 | (17.81) | 222,141 | 0.91 | 0.97 | (0.05) | 70(8) | ||||||||||||||
| 12/31/22(11) | 5.21 | 0.01(10) | 0.45 | 0.46 | — | (0.12) | (0.12) | 5.55 | 8.87(6) | 256,637 | 0.90(7) | 0.98(7) | 0.28(7) | 39(6)(8) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 11/30/17(15) | $5.80 | $(—)(12) | $0.30 | $0.30 | $— | $ — | $— | $6.10 | 5.17%(6) | $3 | 0.79%(7) | 2,069.15%(7) | (0.70)%(7) | 82% | ||||||||||||||
| 06/30/18(4)(5) | 6.10 | —(12) | 0.41 | 0.41 | — | (0.47) | (0.47) | 6.04 | 7.21(6) | 8 | 0.79(7) | 275.86(7) | 0.05(7) | 30(6) | ||||||||||||||
| 06/30/19 | 6.04 | —(12) | (0.10) | (0.10) | (—)(12) | (0.62) | (0.62) | 5.32 | (0.91) | 2,216 | 0.79 | 2.52 | 0.08 | 94(8)(9) | ||||||||||||||
| 06/30/20 | 5.32 | —(12) | (0.52) | (0.52) | — | (0.28) | (0.28) | 4.52 | (10.37) | 11,269 | 0.79 | 1.13 | 0.05 | 81 | ||||||||||||||
| 06/30/21 | 4.52 | (—)(12) | 2.93 | 2.93 | (—)(12) | (0.01) | (0.01) | 7.44 | 64.75 | 18,770 | 0.81 | 0.99 | (0.06) | 80(8) | ||||||||||||||
| 06/30/22 | 7.44 | —(10)(12) | (1.09) | (1.09) | — | (1.14) | (1.14) | 5.21 | (17.70) | 21,299 | 0.81 | 0.96 | 0.05 | 70(8) | ||||||||||||||
| 12/31/22(11) | 5.21 | 0.01(10) | 0.46 | 0.47 | — | (0.12) | (0.12) | 5.56 | 9.07(6) | 23,084 | 0.80(7) | 0.97(7) | 0.38(7) | 39(6)(8) | ||||||||||||||
| Class R6 | ||||||||||||||||||||||||||||
| 11/30/17 | $5.24 | $(0.03) | $0.94 | $0.91 | $— | $ (0.42) | $(0.42) | $5.73 | 18.58% | $67,052 | 0.75% | 0.77% | (0.07)% | 82% | ||||||||||||||
| 06/30/18(4)(5) | 5.73 | —(12) | 0.39 | 0.39 | — | (0.47) | (0.47) | 5.65 | 7.33(6) | 76,246 | 0.73(7) | 0.84(7) | 0.10(7) | 30(6) | ||||||||||||||
| 06/30/19 | 5.65 | 0.01 | (0.08) | (0.07) | (0.01) | (0.62) | (0.63) | 4.95 | (0.59) | 137,585 | 0.73 | 0.84 | 0.14 | 94(8)(9) | ||||||||||||||
| 06/30/20 | 4.95 | 0.01 | (0.49) | (0.48) | — | (0.28) | (0.28) | 4.19 | (10.35) | 64,567 | 0.76 | 0.88 | 0.07 | 81 | ||||||||||||||
| 06/30/21 | 4.19 | (—)(12) | 2.73 | 2.73 | (—)(12) | (0.01) | (0.01) | 6.91 | 65.08 | 63,766 | 0.81 | 0.89 | (0.06) | 80(8) | ||||||||||||||
| 06/30/22 | 6.91 | —(10)(12) | (1.00) | (1.00) | — | (1.14) | (1.14) | 4.77 | (17.73) | 53,500 | 0.81 | 0.87 | 0.05 | 70(8) | ||||||||||||||
| 12/31/22(11) | 4.77 | 0.01(10) | 0.41 | 0.42 | — | (0.12) | (0.12) | 5.07 | 8.85(6) | 63,760 | 0.80(7) | 0.88(7) | 0.38(7) | 39(6)(8) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | The ratios shown include liquidity provider expenses. The ratio of net expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.18%, 1.15% and 1.18%; for Class C shares was 1.95%, 1.95% and 1.95%; for Class Y shares was 0.89%, 0.89% and 0.89%; for Institutional Class shares was 0.79%, 0.79% and 0.79%; and for Class R6 shares was 0.79%, 0.79% and 0.79% for the six months ended December 31,2022 and for the years ended June 30,2022 and 2021, respectively. |
| (3) | The ratios shown include liquidity provider expenses. The ratio of gross expenses to average net assets excluding liquidity provider expenses for Class A shares was 1.18%, 1.15% and 1.18%; for Class C shares was 2.05%, 2.00% and 2.03%; for Class Y shares was 0.97%, 0.95% and 0.97%; for Institutional Class shares was 0.96%, 0.94% and 0.97%; and for Class R6 shares was 0.87%, 0.85% and 0.87% for the six months ended December 31,2022 and for the years ended June 30,2022 and 2021, respectively. |
| (4) | Represents the seven months ended June 30, 2018. |
| (5) | The Fund changed its fiscal year end from November 30 to June 30. |
| (6) | Not annualized. |
| (7) | Annualized. |
| (8) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (9) | Portfolio turnover excludes the purchases and sales of securities by the Touchstone Small Cap Growth Fund acquired on September 21, 2018. If these transactions were included, portfolio turnover would have been higher. |
| (10) | The net investment income per share was based on average shares outstanding for the period. |
| (11) | Unaudited. |
| (12) | Less than $0.005 per share or 0.005%. |
| (13) | Updated to reflect the effect of a 1 for 0.379048 reverse stock split for Class C shares on October 14, 2022. All historical per share information has been retroactively adjusted to reflect this reverse stock split. |
| (14) | Effective October 28, 2017, Class I shares of the Sentinel Small Company Fund (the “Predecessor Fund”) were reorganized into Class Y shares of the Fund. |
| (15) | Represents the period from commencement of operations (October 30, 2017) through November 30, 2017. |
See accompanying Notes to Financial
Statements.
46
Financial Highlights (Continued)
| Touchstone Value Fund | ||||||||||||||||||||||||||||
| Period ended | Net asset value at beginning of period | Net investment income | Net realized and unrealized gains (losses) on investments | Total from investment operations | Distributions from net investment income | Distributions from realized capital gains | Total distributions | Net asset value at end of period | Total return(1) | Net assets at end of period (000's) | Ratio of net expenses to average net assets | Ratio of gross expenses to average net assets | Ratio of net investment income (loss) to average net assets | Portfolio turnover rate | ||||||||||||||
| Class A | ||||||||||||||||||||||||||||
| 06/30/18 | $10.13 | $0.14 | $0.55 | $0.69 | $(0.14) | $ (0.76) | $(0.90) | $9.92 | 6.92% | $36,968 | 1.08% | 1.26% | 1.42% | 24% | ||||||||||||||
| 06/30/19 | 9.92 | 0.16 | 0.57 | 0.73 | (0.16) | (1.08) | (1.24) | 9.41 | 8.53 | 32,964 | 1.08 | 1.26 | 1.67 | 37(2) | ||||||||||||||
| 06/30/20 | 9.41 | 0.13 | (0.98) | (0.85) | (0.12) | (0.49) | (0.61) | 7.95 | (9.83) | 24,567 | 1.08 | 1.26 | 1.37 | 57 | ||||||||||||||
| 06/30/21 | 7.95 | 0.10 | 3.62 | 3.72 | (0.10) | (0.16) | (0.26) | 11.41 | 47.49 | 33,052 | 1.08 | 1.24 | 1.08 | 37 | ||||||||||||||
| 06/30/22 | 11.41 | 0.11 | (0.63) | (0.52) | (0.12) | (0.85) | (0.97) | 9.92 | (5.30) | 156,947 | 1.08 | 1.13 | 1.03 | 63(3) | ||||||||||||||
| 12/31/22(4) | 9.92 | 0.07 | 0.73 | 0.80 | (0.07) | (0.60) | (0.67) | 10.05 | 8.13(5) | 162,336 | 1.08(6) | 1.12(6) | 1.38(6) | 10(5) | ||||||||||||||
| Class C | ||||||||||||||||||||||||||||
| 06/30/18 | $10.10 | $0.08 | $0.54 | $0.62 | $(0.07) | $ (0.76) | $(0.83) | $9.89 | 6.12% | $3,654 | 1.83% | 2.21% | 0.68% | 24% | ||||||||||||||
| 06/30/19 | 9.89 | 0.09 | 0.56 | 0.65 | (0.08) | (1.08) | (1.16) | 9.38 | 7.72 | 3,175 | 1.83 | 2.35 | 0.92 | 37(2) | ||||||||||||||
| 06/30/20 | 9.38 | 0.06 | (0.97) | (0.91) | (0.05) | (0.49) | (0.54) | 7.93 | (10.49) | 2,175 | 1.83 | 2.43 | 0.62 | 57 | ||||||||||||||
| 06/30/21 | 7.93 | 0.03 | 3.61 | 3.64 | (0.03) | (0.16) | (0.19) | 11.38 | 46.40 | 1,943 | 1.83 | 2.46 | 0.33 | 37 | ||||||||||||||
| 06/30/22 | 11.38 | 0.02 | (0.64) | (0.62) | (0.03) | (0.85) | (0.88) | 9.88 | (6.11) | 5,722 | 1.83 | 2.08 | 0.28 | 63(3) | ||||||||||||||
| 12/31/22(4) | 9.88 | 0.03 | 0.73 | 0.76 | (0.03) | (0.60) | (0.63) | 10.01 | 7.76(5) | 5,576 | 1.83(6) | 2.00(6) | 0.63(6) | 10(5) | ||||||||||||||
| Class Y | ||||||||||||||||||||||||||||
| 06/30/18 | $10.17 | $0.17 | $0.55 | $0.72 | $(0.17) | $ (0.76) | $(0.93) | $9.96 | 7.19% | $81,988 | 0.81% | 0.95% | 1.70% | 24% | ||||||||||||||
| 06/30/19 | 9.96 | 0.19 | 0.57 | 0.76 | (0.19) | (1.08) | (1.27) | 9.45 | 8.82 | 92,928 | 0.79 | 0.94 | 1.96 | 37(2) | ||||||||||||||
| 06/30/20 | 9.45 | 0.15 | (0.98) | (0.83) | (0.15) | (0.49) | (0.64) | 7.98 | (9.64) | 75,028 | 0.80 | 0.96 | 1.64 | 57 | ||||||||||||||
| 06/30/21 | 7.98 | 0.13 | 3.64 | 3.77 | (0.13) | (0.16) | (0.29) | 11.46 | 47.93 | 100,542 | 0.83 | 0.95 | 1.33 | 37 | ||||||||||||||
| 06/30/22 | 11.46 | 0.14 | (0.64) | (0.50) | (0.14) | (0.85) | (0.99) | 9.97 | (5.06) | 86,615 | 0.83 | 0.88 | 1.28 | 63(3) | ||||||||||||||
| 12/31/22(4) | 9.97 | 0.08 | 0.74 | 0.82 | (0.08) | (0.60) | (0.68) | 10.11 | 8.33(5) | 105,206 | 0.83(6) | 0.87(6) | 1.63(6) | 10(5) | ||||||||||||||
| Institutional Class | ||||||||||||||||||||||||||||
| 06/30/18 | $10.14 | $0.19 | $0.55 | $0.74 | $(0.19) | $ (0.76) | $(0.95) | $9.93 | 7.34% | $262,467 | 0.68% | 0.87% | 1.82% | 24% | ||||||||||||||
| 06/30/19 | 9.93 | 0.20 | 0.57 | 0.77 | (0.20) | (1.08) | (1.28) | 9.42 | 8.96 | 208,686 | 0.68 | 0.89 | 2.07 | 37(2) | ||||||||||||||
| 06/30/20 | 9.42 | 0.16 | (0.97) | (0.81) | (0.16) | (0.49) | (0.65) | 7.96 | (9.43) | 153,945 | 0.68 | 0.90 | 1.77 | 57 | ||||||||||||||
| 06/30/21 | 7.96 | 0.14 | 3.63 | 3.77 | (0.14) | (0.16) | (0.30) | 11.43 | 48.12 | 289,120 | 0.68 | 0.88 | 1.48 | 37 | ||||||||||||||
| 06/30/22 | 11.43 | 0.16 | (0.65) | (0.49) | (0.16) | (0.85) | (1.01) | 9.93 | (5.02) | 252,281 | 0.68 | 0.83 | 1.43 | 63(3) | ||||||||||||||
| 12/31/22(4) | 9.93 | 0.10 | 0.73 | 0.83 | (0.09) | (0.60) | (0.69) | 10.07 | 8.45(5) | 226,749 | 0.68(6) | 0.82(6) | 1.78(6) | 10(5) | ||||||||||||||
| Class R6 | ||||||||||||||||||||||||||||
| 06/30/22(7) | $11.91 | $0.11 | $(1.11) | $(1.00) | $(0.13) | $ (0.85) | $(0.98) | $9.93 | (9.10)%(5) | $395 | 0.63%(6) | 8.11%(6) | 1.47%(6) | 63%(3) | ||||||||||||||
| 12/31/22(4) | 9.93 | 0.07 | 0.76 | 0.83 | (0.09) | (0.60) | (0.69) | 10.07 | 8.44(5) | 21,436 | 0.63(6) | 0.83(6) | 1.83(6) | 10(5) | ||||||||||||||
| (1) | Total returns shown exclude the effect of applicable sales loads and fees. If these charges were included, the returns would be lower. |
| (2) | Portfolio turnover excludes securities delivered from processing redemptions-in-kind. |
| (3) | Portfolio turnover excludes the purchases and sales of securities of the AIG Strategic Value Fund acquired on July 16, 2021. If these transactions were included, portfolio turnover would have been higher. |
| (4) | Unaudited. |
| (5) | Not annualized. |
| (6) | Annualized. |
| (7) | Represents the period from commencement of operations (October 28, 2021) through June 30, 2022 for Class R6. |
See accompanying Notes to Financial
Statements.
47
Notes to Financial Statements
December 31, 2022 (Unaudited)
1. Organization
The Touchstone
Strategic Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust was established as a
Massachusetts business trust pursuant to an Agreement and Declaration of Trust dated November 18, 1982. The Trust consists of nineteen funds, including the following nine funds (individually, a “Fund”, and
collectively, the “Funds”):
| Touchstone Balanced Fund ("Balanced Fund”) |
| Touchstone Core Municipal Bond Fund ("Core Municipal Bond Fund”) |
| Touchstone International Equity Fund ("International Equity Fund”) |
| Touchstone International Growth Fund ("International Growth Fund”) |
| Touchstone Large Cap Focused Fund ("Large Cap Focused Fund”) |
| Touchstone Large Cap Fund ("Large Cap Fund”) |
| Touchstone Large Company Growth Fund ("Large Company Growth Fund”) |
| Touchstone Small Company Fund ("Small Company Fund”) |
| Touchstone Value Fund ("Value Fund”) |
Each Fund is
diversified, with the exception of the Large Cap Focused Fund and the Large Company Growth Fund, which are non-diversified.
The Agreement and
Declaration of Trust permits the Trust to issue an unlimited number of shares of beneficial interest of each Fund. The table below indicates the classes of shares that each Fund is registered to offer:
| Class A | Class C | Class Y | Institutional Class | Class R6 | |
| Balanced Fund | X | X | X | X | |
| Core Municipal Bond Fund | X | X | X | X | |
| International Equity Fund | X | X | X | X | |
| International Growth Fund | X | X | X | X | |
| Large Cap Focused Fund | X | X | X | X | X |
| Large Cap Fund | X | X | X | X | |
| Large Company Growth Fund | X | X | X | X | |
| Small Company Fund | X | X | X | X | X |
| Value Fund | X | X | X | X | X |
The assets of each
Fund are segregated, and a shareholder’s interest is limited to the Fund in which shares are held. The Funds’ prospectus provides a description of each Fund’s investment goal, policies, and
strategies along with information on the classes of shares currently being offered.
2. Significant Accounting
Policies
The following is a
summary of the Funds’ significant accounting policies:
Each Fund is an
investment company that follows the accounting and reporting guidance of Accounting Standards Codification Topic 946 applicable to investment companies.
Security valuation and
fair value measurements — U.S. generally accepted accounting principles (“U.S. GAAP”) defines fair value as the price the Funds would receive to sell an asset or pay to transfer a liability in
an orderly transaction between market participants at the measurement date. All investments in securities are recorded at their fair value. The Funds define the term “market value”, as used
throughout this report, as the estimated fair value. The Funds use various methods to measure fair value of their portfolio securities on a recurring basis. U.S. GAAP fair value measurement standards require
disclosure of a hierarchy that prioritizes inputs to valuation methods. These inputs are summarized in the three broad levels listed below:
• Level 1 − quoted prices in
active markets for identical securities
• Level 2 − other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 − significant unobservable inputs
(including a Fund’s own assumptions in determining the fair value of investments)
The inputs or methodology
used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The aggregate value by
input level, as of December 31, 2022, for each Fund’s investments, is included in each Fund’s Portfolio of Investments, which also includes a breakdown of the Fund’s investments by geographic, credit
quality and/or sector allocation. The Funds did not hold or transfer any Level 3 categorized securities during the six months ended December 31, 2022.
48
Notes to Financial
Statements (Unaudited) (Continued)
Changes in valuation
techniques may result in transfers into or out of an investment’s assigned level within the hierarchy.
The Funds' portfolio
securities are valued as of the close of the regular session of trading on the New York Stock Exchange (“NYSE”) (currently 4:00 p.m., Eastern Time or at the time as of which the NYSE establishes official
closing prices). Portfolio securities traded on stock exchanges are valued at the last reported sale price, official close price, or last bid price if no sales are reported. Portfolio securities quoted by NASDAQ are
valued at the NASDAQ Official Closing Price (“NOCP”) or from the primary exchange on which the security trades. To the extent these securities are actively traded, they are categorized in Level 1 of the
fair value hierarchy. Options and futures are valued at the last quoted sales price. If there is no such reported sale on the valuation date, long option positions are valued at the most recent bid price, and
short option positions are valued at the most recent ask price on the valuation date and are categorized in Level 1. Shares of mutual funds in which the Funds invest are valued at their respective net asset
value (“NAV”) as reported by the underlying funds and are categorized in Level 1.
Debt securities held
by the Funds are valued at their evaluated bid by an independent pricing service or at their last broker-quoted bid prices as obtained from one or more of the major market makers for such securities. Independent
pricing services use information provided by market makers or estimates of market values through accepted market modeling conventions. Observable inputs to the models may include prepayment speeds, pricing spread,
yield, trade information, dealer quotes, market color, cash flow models, the securities’ terms and conditions, among others, and are generally categorized in Level 2. Investments in asset-backed and
mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche
specific spread to the benchmark yield based on the unique attributes of the tranche, and are generally categorized in Level 2. Debt securities with remaining maturities of 60 days or less may be valued at
amortized cost, provided such amount approximates market value and are categorized in Level 2. While this method provides consistency in valuation (and may only be used if it approximates market value), it may result
in periods during which fair value, as determined by amortized cost, is higher or lower than the price that would be received if the Fund sold the investment.
Securities mainly
traded on a non-U.S. exchange or denominated in foreign currencies are generally valued according to the preceding closing values on that exchange, translated to U.S. dollars using currency exchange rates as of the
close of regular trading on the NYSE, and are generally categorized in Level 1. However, if an event that may change the value of a security occurs after the time that the closing value on the non-U.S. exchange was
determined, but before the close of regular trading on the NYSE, the security may be priced based on fair value and is generally categorized in Level 2. This may cause the value of the security, if held on the books
of a Fund, to be different from the closing value on the non-U.S. exchange and may affect the calculation of that Fund’s NAV. The Funds may use fair value pricing under the following circumstances, among
others:
• If the value of a security has been materially affected by events occurring before the Funds' pricing time but after the close of the primary markets on which the security is
traded.
• If the exchange on which a portfolio security is principally traded closes early or if trading in a particular portfolio security was halted during the day and did not resume prior to the Funds' NAV
calculation.
• If a security is so thinly
traded that reliable market quotations are unavailable due to infrequent trading.
• If the validity of market
quotations is not reliable.
Securities held by the
Funds that do not have readily available market quotations, significant observable inputs, or securities for which the available market quotations are not reliable, are priced at their estimated fair value using
procedures established by Touchstone Advisors, Inc. (the “Adviser”) and adopted by the Funds' Board of Trustees (the “Board”) and are generally categorized in Level 3.
Collateralized Loan
Obligations — The Balanced Fund may invest in collateralized loan obligations (“CLOs”). CLOs are types of asset-backed securities. A CLO is an entity that is backed by syndicated bank
loans. The cash flows of the CLO can be split into multiple segments, called “tranches,” which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche.
This tranche bears the greatest risk of defaults from the underlying assets in the CLO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded
from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive higher ratings from one or more
of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults
and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.
Investment
companies — The Funds may invest in securities of other investment companies, including exchange-traded funds (“ETFs”), open-end funds and closed-end funds. Open-end funds are
investment companies that issue new shares continuously and redeem shares daily. Closed-end funds are investment companies that typically issue a fixed number of shares that trade on a securities exchange or
over-the-counter (“OTC”). An ETF is an investment company that typically seeks to track the performance of an index by holding in its portfolio shares of all the companies, or a representative sample of
the companies, that are components of a particular index. ETF shares are traded on a securities exchange based on their market value. The risks of investment in other
49
Notes to Financial
Statements (Unaudited) (Continued)
investment companies typically
reflect the risks of the types of securities in which the other investment companies invest. Investments in ETFs and closed-end funds are subject to the additional risk that their shares may trade at a premium or
discount to their NAV. When a Fund invests in another investment company, shareholders of the Fund indirectly bear their proportionate share of the other investment company’s fees and expenses, including
operating, registration, trustee, licensing, and marketing, as well as their share of the Fund’s fees and expenses.
Futures Contracts — The Balanced Fund may buy and sell futures contracts and related options to manage its exposure to changing interest rates and securities prices. Some strategies reduce the
Fund’s exposure to price fluctuations, while others tend to increase its market exposure. Futures and options on futures can be volatile instruments and involve certain risks that could negatively impact the
Fund’s return. When the Fund purchases or sells a futures contract, or sells an option thereon, the Fund must deposit initial margin and, in some instances, daily variation margin, to meet its obligations under
a contract with a futures commission merchant.
When the contract is
closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transactions and the Fund’s basis in the contract. Risks of entering into futures
contracts include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying instruments. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market resulting in an inability to close a futures position prior to its maturity date. Third, the purchase of a futures contract involves the risk that the Fund could lose more
than the original margin deposit required to initiate the futures transaction. Finally, the risk exists that losses could exceed amounts disclosed on the Statements of Assets and Liabilities. There is minimal
counterparty credit risk involved in entering into futures contracts since they are exchange-traded instruments and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the
futures against default.
As of December 31, 2022,
the Balanced Fund did not hold any futures contracts.
Foreign currency
translation — The books and records of the Funds are maintained in U.S. dollars and translated into U.S. dollars on the following basis:
| (1) | market value of investment securities, assets and liabilities at the current rate of exchange on the valuation date; and |
| (2) | purchases and sales of investment securities, income, and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions. |
The Funds do not isolate
that portion of gains and losses on investments in equity securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of equity securities.
Real Estate Investment
Trusts — The Funds may invest in real estate investment trusts (“REITs”) that involve risks not associated with investing in stocks. Risks associated with investments in REITs
include declines in the value of real estate, general and economic conditions, changes in the value of the underlying property and defaults by borrowers. The value of assets in the real estate industry may go through
cycles of relative underperformance and outperformance in comparison to equity securities markets in general. Dividend income is recorded using management’s estimate of the income included in distributions
received from REIT investments. The actual amounts of income, return of capital and capital gains are only determined by each REIT after its fiscal year-end and may differ from the estimated amount. Estimates of
income are adjusted in the Funds to the actual amounts when the amounts are determined.
Derivative instruments
and hedging activities — The Balanced Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement” or “MNA”) or similar
agreement with certain counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives and foreign exchange contracts, and typically contains, among
other things, collateral posting terms and master netting provisions in the event of a default or termination. Under an ISDA Master Agreement, a party may, under certain circumstances, offset with the counterparty
certain derivative financial instruments’ payables or receivables with collateral held or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net
payment in the event of default (close-out netting). These default events include bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may impose
restrictions on or prohibitions against the right of offset.
When entering into a
derivative transaction, a Fund may be required to post and maintain collateral or margin (including both initial and variation margin). Collateral and margin requirements differ by type of derivative. Margin
requirements are established by the broker or clearing house for exchange-traded and centrally cleared derivatives (financial futures contracts, options, and centrally cleared swaps). Brokers can ask for margining in
excess of the clearing house’s minimum in certain circumstances. Collateral terms are contract specific for OTC derivatives (forward foreign currency contracts, options, and swaps). For derivatives traded under
an ISDA Master Agreement, the collateral requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any
collateral currently pledged by the Fund and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the
50
Notes to Financial
Statements (Unaudited) (Continued)
Fund and cash collateral received
from the counterparty, if any, are reported separately on the Statements of Assets and Liabilities as cash deposits held at prime broker and due to prime broker, respectively. Non-cash collateral pledged by the Fund,
if any, is noted in the Portfolio of Investments. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from
counterparty non-performance.
Certain ISDA Master
Agreements allow counterparties to OTC derivatives transactions to terminate derivative contracts prior to maturity in the event a Fund’s net assets decline by a stated percentage or the Fund fails to meet the
terms of its ISDA Master Agreement, which would cause the Fund (counterparty) to accelerate payment of any net liability owed to the counterparty (Fund).
For financial reporting
purposes, the Balanced Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.
As of December 31, 2022,
the Balanced Fund did not hold any assets and liabilities that were subject to a MNA.
The following table sets
forth the effect of the Balanced Fund's derivative financial instruments by primary risk exposure on the Statements of Operations for the six months ended December 31, 2022:
| Fund | Derivatives not accounted for as hedging instruments under ASC 815 | Realized Gains (Losses) on Derivatives | Change in Unrealized Appreciation (Depreciation) on Derivatives |
| Balanced Fund | Futures - Interest Rate Contracts* | $(388,596) | $— |
| Swap Agreements - Interest Rate Contracts** | 131,841 | — |
| * | Statements of Operations Location: Net realized losses on futures contracts. |
| ** | Statements of Operations Location: Net realized gains on swap agreements. |
For the six months
ended December 31, 2022, the average quarterly notional value of outstanding derivative financial instruments was as follows:
| Balanced Fund | |
| Interest Rate Contracts: | |
| Futures Contracts - Notional Value | $11,440,815 |
| Interest Rate Swaps - Notional Value | — * |
| * | The balance at each quarter end was zero. |
Portfolio securities
loaned — The Funds may lend their portfolio securities. Lending portfolio securities exposes the Funds to the risk that the borrower may fail to return the loaned securities or may not be
able to provide additional collateral or that the Funds may experience delays in recovery of the loaned securities or loss of rights in the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain cash collateral with the Funds' custodian. The loaned securities are secured by collateral valued at least equal, at all times, to the market value of the loaned securities plus accrued
interest, if any. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security
lending agreement. The cash collateral is reinvested by the Funds' custodian into an approved short-term investment vehicle. The approved short-term investment vehicle is subject to market risk.
As of December 31, 2022,
the following Funds loaned securities and received collateral as follows:
| Fund | Security Type | Market Value of Securities Loaned* | Market Value of Collateral Received** | Net Amount*** |
| Small Company Fund | Common Stocks | $1,089,132 | $1,099,836 | $10,704 |
| * | The remaining contractual maturity is overnight for all securities. |
| ** | Gross amount of recognized liabilities for securities lending included in the Statements of Assets and Liabilities. |
| *** | Net amount represents the net amount payable due to (received from) the borrower in the event of default. |
All cash collateral is
received, held, and administered by the Funds' custodian for the benefit of the lending Fund in its custody account or other account established for the purpose of holding collateral in cash equivalents.
Funds participating in
securities lending receive compensation in the form of fees. Securities lending income is derived from lending long securities from the Funds to creditworthy approved borrowers at rates that are determined based on
daily trading volumes, float, short-term interest rates and market liquidity and is shown net of fees on the Statements of Operations. When a Fund lends securities, it retains the interest or dividends on the
investment of any cash received as collateral, and the Fund continues to receive interest or dividends on the loaned securities.
51
Notes to Financial
Statements (Unaudited) (Continued)
Unrealized gain or loss
on the market value of the loaned securities that may occur during the term of the loan is recognized by the Fund. The Fund has the right under the lending agreement to recover any loaned securities from the borrower
on demand.
When-issued or delayed
delivery transactions — Each Fund may purchase or sell securities on a when-issued or delayed delivery basis. These transactions involve a commitment by the Fund to purchase or sell securities for a
predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When purchasing a security on a delayed delivery basis, the Fund assumes the rights and risks of ownership
of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining NAV. The Fund may dispose of or renegotiate a delayed delivery transaction after it is
entered into, and may sell when-issued securities before they are delivered, which may result in a capital gain or loss. When the Fund has sold a security on a delayed delivery basis, the Fund does not participate in
future gains and losses with respect to the security. When-issued or delayed delivery transactions physically settling within 35-days are deemed not to involve a senior security. When-issued or delayed delivery
transactions that do not physically settle within 35-days are required to be treated as derivatives transactions in compliance with the regulatory limitations set forth in Rule 18f-4 under the 1940 Act (the
"Derivatives Rule"). Effective August 19, 2022 (the “Compliance Date”), the Derivatives Rule replaced the asset segregation regime of Investment Company Act Release No. 10666 (“Release 10666”)
with a new framework for the use of derivatives by registered funds. As of the Compliance Date, the Securities and Exchange Commission ("SEC") rescinded Release 10666 and withdrew no-action letters and similar
guidance addressing a fund’s use of derivatives and began requiring funds to satisfy the requirements of the Derivatives Rule. As a result, on or after the Compliance Date, the Funds will no longer engage in
“segregation” or “coverage” techniques with respect to derivatives transactions and will instead comply with the applicable requirements of the Derivatives Rule.
Share valuation — The NAV per share of each class of shares of each Fund is calculated daily by dividing the total value of a Fund’s assets attributable to that class, less liabilities
attributable to that class, by the number of outstanding shares of that class.
The maximum offering
price per share of Class A shares of the equity funds (all of the Funds except the Core Municipal Bond Fund) is equal to the NAV per share plus a sales load equal to 5.26% of the NAV (or 5.00% of the offering price).
The maximum offering price per share of Class A shares of the Core Municipal Bond Fund is equal to the NAV per share plus a sales load equal to 3.36% of the NAV (or 3.25% of the offering price). There is no sales load
on equity or fixed income fund purchases when aggregate purchases in all Touchstone funds equal at least $1 million or $500,000, respectively. The maximum offering price per share of Classes C, Y, Institutional Class
and R6 shares of the Funds is equal to the NAV per share.
The redemption price
per share of each class of shares of the Funds is generally equal to the NAV per share. However, Class A redemptions that were part of a no-load purchase due to the aggregate purchase amount in all Touchstone Funds
equaling at least the maximum breakpoint where a Finder’s Fee was paid may be subject to a contingent deferred sales charge (“CDSC”) of up to 1.00% or 0.50% for equity or fixed income funds,
respectively, if redeemed within a one-year period from the date of purchase. Additionally, purchases of Class C shares of the Funds are subject to a CDSC of 1.00% if redeemed within a one-year period from the date of
purchase. The CDSC will be assessed on an amount equal to the lesser of (1) the NAV at the time of purchase of the shares being redeemed or (2) the NAV of such shares being redeemed.
Investment income — Dividend income from securities is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Funds, where
applicable. Interest income from securities is recorded on the basis of interest accrued, premium amortized and discount accreted. Realized gains and losses resulting from principal pay downs on mortgage-backed and
asset-backed securities are included in interest income. Market discounts, original issue discounts and market premiums on debt securities are accreted/amortized to interest income over the life of the security or to
the appropriate call date, as applicable, with a corresponding adjustment in the cost basis of that security. In addition, it is the Funds’ policy to accrue for foreign capital gains taxes, if applicable, on
certain foreign securities held by the Funds. An estimated foreign capital gains tax is recorded daily on net unrealized gains on these securities and is payable upon the sale of such securities when a gain is
realized.
Distributions to
shareholders — Each Fund intends to distribute to its shareholders substantially all of its income and capital gains. Each Fund, except the Balanced Fund, the Core Municipal Bond Fund and the
Value Fund, declares and distributes net investment income, if any, annually, as a dividend to shareholders. The Balanced Fund and Value Fund declare and distribute net investment income, if any quarterly, as a
dividend to shareholders. The Core Municipal Bond Fund declares distributions from net investment income on a daily basis and distributes as a dividend to shareholders on a monthly basis. Each Fund makes distributions
of capital gains, if any, at least annually, net of applicable capital loss carryforwards. Income distributions and capital gain distributions are determined in accordance with income tax regulations. Recognition of
the Funds' net investment income from investments in underlying funds is affected by the timing of dividend declarations by the underlying funds.
Allocations — Investment income earned, realized capital gains and losses, and unrealized appreciation and depreciation for a Fund are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund. Class-specific expenses are charged directly to the class incurring the expense. Common expenses, which are not attributable to a specific class, are allocated
daily to each class of shares based upon their proportionate share of total net assets of the Fund. Expenses not directly billed to a Fund are allocated proportionally among all Funds in the Trust, and, if applicable,
Touchstone ETF Trust, Touchstone Funds
52
Notes to Financial
Statements (Unaudited) (Continued)
Group Trust and Touchstone Variable
Series Trust (collectively with the Trust, “Touchstone Fund Complex”), daily in relation to net assets of each Fund or another reasonable measure.
Security transactions — Security transactions are reflected for financial reporting purposes as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the
identified cost basis.
Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from
those estimates.
LIBOR Transition — Many debt securities, derivatives and other financial instruments in which the Funds may invest, as well as any borrowings made by the Funds from banks or from other lenders,
utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark index for interest rate calculations. LIBOR is a measure of the average interest rate at which major global banks can
borrow from one another. Plans are underway to phase out the use of LIBOR by June 30, 2023. The ICE Benchmark Administration Limited, the administrator of LIBOR, ceased publishing certain LIBOR maturities, including
some U.S. LIBOR maturities, on December 31, 2021, and is expected to cease publishing the remaining and most liquid U.S. LIBOR maturities on June 30, 2023. Before then, it is expected that market participants have or
will transition to the use of different reference or benchmark indices. However, there is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement index. As such,
the potential effect of a transition away from LIBOR on the Funds’ investments cannot yet be determined.
3. Investment Transactions
Investment transactions
(excluding short-term investments and U.S. Government securities) were as follows for the six months ended December 31, 2022:
| Balanced Fund | Core Municipal Bond Fund | International Equity Fund | International Growth Fund | |
| Purchases of investment securities | $28,098,117 | $16,162,266 | $15,651,887 | $12,113,704 |
| Proceeds from sales and maturities | $60,611,143 | $21,178,132 | $16,065,795 | $10,265,179 |
| Large Cap Focused Fund* | Large Cap Fund* | Large Company Growth Fund* | Small Company Fund* | Value Fund | |
| Purchases of investment securities | $64,494,314 | $16,178,838 | $38,748,307 | $313,080,016 | $52,970,093 |
| Proceeds from sales and maturities | $40,172,636 | $20,007,783 | $34,059,557 | $308,675,127 | $71,724,561 |
| * | The Large Cap Focused Fund, the Large Cap Fund, the Large Company Growth Fund and the Small Company Fund had a redemption-in-kind out of the Fund of $100,279,162, $15,753,664, $12,205,971 and $23,083,679, respectively. The redemptions were comprised of securities of $ 84,552,621, $14,136,317, $9,895,085 and $ 14,948,558, which are excluded from the proceeds from sales and maturities, and cash in the amount of $15,726,541, $1,617,347, $2,310,886 and $8,135,121 for the Large Cap Focused Fund, the Large Cap Fund, the Large Company Growth Fund and the Small Company Fund, respectively. |
For the six months
ended December 31, 2022, purchases and proceeds from sales and maturities in U.S. Government Securities were $193,859,483 and $170,527,941, respectively, for the Balanced Fund. There were no purchases or proceeds from
sales and maturities of U.S. Government securities by the other Funds for the six months ended December 31, 2022.
4. Transactions with
Affiliates and Other Related Parties
Certain officers of
the Trust are also officers of the Adviser, Touchstone Securities, Inc. (the “Underwriter”), or The Bank of New York Mellon (“BNY Mellon”), the Sub-Administrator to the Funds. Such officers
receive no compensation from the Trust. The Adviser and the Underwriter are each wholly-owned subsidiaries of Western & Southern Financial Group, Inc. ("Western & Southern").
On behalf of the
Funds, the Adviser pays each Independent Trustee a quarterly retainer plus additional retainers to the Lead Independent Trustee and the chairs of each standing committee. Interested Trustees do not receive
compensation from the Funds. Each Independent Trustee also receives compensation for each Board meeting and committee meeting attended. Each standing committee chair receives additional compensation for each committee
meeting that he or she oversees. The Adviser is reimbursed by
53
Notes to Financial
Statements (Unaudited) (Continued)
the Funds for the Independent
Trustees’ compensation and out-of-pocket expenses relating to their services. The Funds accrued Trustee-related expenses of $118,710 for the Funds’ Board for the six months ended December 31, 2022.
MANAGEMENT & EXPENSE
LIMITATION AGREEMENTS
The Adviser provides
general investment supervisory services for the Funds, under the terms of an advisory agreement (the “Advisory Agreement”). Under the Advisory Agreement, each Fund pays the Adviser a fee, which is computed
and accrued daily and paid monthly, at an annual rate based on average daily net assets of each Fund as shown in the table below.
| Balanced Fund | 0.55% on the first $200 million 0.50% on the next $200 million 0.45% on the next $600 million 0.40% on the next $1 billion 0.35% on such assets over $2 billion |
| Core Municipal Bond Fund | 0.40% on the first $300 million 0.30% on such assets over $300 million |
| International Equity Fund | 0.70% on the first $500 million 0.65% on the next $300 million 0.60% on the next $200 million 0.50% on the next $1 billion 0.40% on such assets over $2 billion |
| International Growth Fund | 0.80% on the first $1 billion 0.75% on the next $500 million 0.70% on the next $500 million 0.65% on such assets over $2 billion |
| Large Cap Focused Fund | 0.70% on the first $500 million 0.65% on the next $300 million 0.60% on the next $200 million 0.50% on the next $1 billion 0.40% on such assets over $2 billion |
| Large Cap Fund | 0.60% on the first $500 million 0.54% on the next $500 million 0.50% on such assets over $1 billion |
| Large Company Growth Fund | 0.60% on all assets |
| Small Company Fund | 0.70% on the first $500 million 0.65% on the next $300 million 0.60% on the next $200 million 0.50% on the next $1 billion 0.40% on such assets over $2 billion |
| Value Fund | 0.65% on the first $200 million 0.55% on such assets over $200 million |
The Adviser has entered
into investment sub-advisory agreements with the following parties (each, a “Sub-Adviser”):
| Barrow, Hanley, Mewhinney & Strauss, LLC | London Company of Virginia d/b/a The London Company |
| Value Fund | Large Cap Fund |
| DSM Capital Partners LLC | Fort Washington Investment Advisors, Inc.* |
| International Growth Fund | Balanced Fund |
| Large Company Growth Fund | International Equity Fund |
| Sage Advisory Services, Ltd Co. | Large Cap Focused Fund |
| Core Municipal Bond Fund | Small Company Fund |
* Affiliate of the
Adviser and wholly-owned subsidiary of Western & Southern.
The Adviser pays
sub-advisory fees to each Sub-Adviser from its advisory fee.
The Adviser entered
into an expense limitation agreement (the “Expense Limitation Agreement”) to contractually limit the annual operating expenses of the Funds, excluding: dividend and interest expenses relating to short sales;
interest; taxes; brokerage commissions and other transaction costs; portfolio transaction and investment related expenses, including expenses associated with the Funds’ liquidity providers; other expenditures
which are capitalized in accordance with U.S. GAAP; the cost of “Acquired Fund Fees and Expenses”, if any; and other extraordinary expenses not incurred in the ordinary course of business. The maximum
annual
54
Notes to Financial
Statements (Unaudited) (Continued)
operating expense limit in any year
with respect to the Funds is based on a percentage of the average daily net assets of the Funds. The Adviser has agreed to waive a portion of its fees, and to reimburse certain fund expenses in order to maintain the
following expense limitations for the Funds:
| Class A | Class C | Class Y | Institutional Class | Class R6 | Termination Date | |
| Balanced Fund | 1.01% | 1.78% | 0.81% | — | 0.64% | October 29, 2023 |
| Core Municipal Bond Fund | 0.80% | 1.55% | 0.55% | 0.48% | — | October 29 , 2023 |
| International Equity Fund | 1.36% | 1.99% | 0.99% | 0.89% | — | October 29, 2023 |
| International Growth Fund | 1.24% | 1.99% | 0.99% | 0.89% | — | October 29, 2023 |
| Large Cap Focused Fund | 1.00% | 1.79% | 0.72% | 0.69% | 0.65% | October 29, 2023 |
| Large Cap Fund | 1.03% | 1.78% | 0.78% | 0.68% | — | October 29, 2023 |
| Large Company Growth Fund | 1.04% | 1.79% | 0.79% | 0.69% | — | October 29, 2023 |
| Small Company Fund | 1.22% | 1.95% | 0.89% | 0.79% | 0.79% | October 29, 2023 |
| Value Fund | 1.08% | 1.83% | 0.83% | 0.68% | 0.63% | October 29, 2023 |
The Expense Limitation
Agreement can be terminated, with respect to each Fund, by a vote of a Fund's Board if it deems the termination to be beneficial to the Fund's shareholders.
During the six months
ended December 31, 2022, the Adviser or its affiliates waived investment advisory fees, administration fees or other operating expenses, including distribution fees of the Funds, as follows:
| Fund | Investment Advisory Fees Waived | Administration Fees Waived | Other Operating Expenses Reimbursed/ Waived | Total |
| Balanced Fund | $— | $18 | $9,005 | $9,023 |
| Core Municipal Bond Fund | — | 21,036 | 53,345 | 74,381 |
| International Equity Fund | — | 6,888 | 78,990 | 85,878 |
| International Growth Fund | — | 40,149 | 91,662 | 131,811 |
| Large Cap Focused Fund | — | 15,456 | 451,076 | 466,532 |
| Large Cap Fund | — | 48,732 | 120,465 | 169,197 |
| Large Company Growth Fund | — | 77,133 | 65,236 | 142,369 |
| Small Company Fund | — | 23,424 | 132,011 | 155,435 |
| Value Fund | — | 108,133 | 129,250 | 237,383 |
Under the terms of
the Expense Limitation Agreement, the Adviser is entitled to recover, subject to approval by the Funds’ Board, such amounts waived or reimbursed for a period of up to three years from the date on which the
Adviser reduced its compensation or assumed expenses for the Funds. A Fund will make repayments to the Adviser only if such repayment does not cause the Fund's operating expenses (after the repayment is taken into
account) to exceed the Fund's expense limit in place when such amounts were waived or reimbursed by the Adviser and the Fund's current expense limitation.
As of December 31, 2022,
the Adviser may seek recoupment of previously waived fees and reimbursed expenses as follows:
| Fund | Expires on or before June 30, 2023 | Expires on or before June 30, 2024 | Expires on or before June 30, 2025 | Expires on or before June 30, 2026 | Total |
| Balanced Fund | $— | $— | $4,428 | $2,788 | $7,216 |
| Core Municipal Bond Fund | 80,340 | 73,030 | 99,819 | 40,915 | 294,104 |
| International Equity Fund | 78,710 | 67,613 | 64,511 | 32,600 | 243,434 |
| International Growth Fund | 101,798 | 255,371 | 302,133 | 126,738 | 786,040 |
| Large Cap Focused Fund | 805,632 | 757,813 | 413,033 | 300,548 | 2,277,026 |
| Large Cap Fund | 188,979 | 338,365 | 321,303 | 158,534 | 1,007,181 |
| Large Company Growth Fund | 173,435 | 357,163 | 309,075 | 136,893 | 976,566 |
| Small Company Fund | 297,648 | 262,375 | 229,745 | 146,405 | 936,173 |
| Value Fund | 273,170 | 515,267 | 498,918 | 200,666 | 1,488,021 |
The Adviser did not
recoup any amounts it previously waived or reimbursed during the six months ended December 31, 2022.
ADMINISTRATION AGREEMENT
The Adviser entered
into an Administration Agreement with the Trust, whereby the Adviser is responsible for: supplying executive and regulatory compliance services; supervising the preparation of tax returns; coordinating the preparation
of reports to
55
Notes to Financial
Statements (Unaudited) (Continued)
shareholders and reports to and filings
with the SEC and state securities authorities, as well as materials for meetings of the Board; calculating the daily NAV per share; and maintaining the financial books and records of each Fund.
For its services, the
Adviser’s annual administrative fee is:
0.145%
on the first $20 billion of the aggregate average daily net assets;
0.11% on the next $10
billion of aggregate average daily net assets;
0.09% on the next $10
billion of aggregate average daily net assets; and
0.07% on the
aggregate average daily net assets over $40 billion.
The fee is computed and
allocated among the Touchstone Fund Complex on the basis of relative daily net assets.
The Adviser has engaged
BNY Mellon as the Sub-Administrator to the Trust. BNY Mellon provides administrative and accounting services to the Trust and is compensated directly by the Adviser, not the Trust.
TRANSFER AGENT AGREEMENT
Under the terms of the
Transfer Agent Agreement between the Trust and BNY Mellon Investment Servicing (U.S.) Inc. ("Transfer Agent"), the Transfer Agent to the Funds maintains the records of each shareholder’s account, answers
shareholders’ inquiries concerning their accounts, processes purchases and redemptions of each Fund’s shares, acts as dividend and distribution disbursing agent, and performs other shareholder service
functions. For these services, the Transfer Agent receives a monthly fee from each Fund. In addition, each Fund pays out-of-pocket expenses incurred by the Transfer Agent, including, but not limited to, postage and
supplies.
The Funds may
reimburse the Adviser for fees paid to intermediaries such as banks, broker-dealers, financial advisers or other financial institutions for sub-transfer agency, sub-administration and other services provided to
investors whose shares of record are held in omnibus, other group accounts, retirement plans or accounts traded through registered securities clearing agents. These fees, which are included in Transfer Agent fees in
the Statements of Operations, may vary based on, for example, the nature of services provided, but generally range up to 0.15% of the assets of the class serviced or maintained by the intermediary or up to $22 per
sub-account maintained by the intermediary.
PLANS OF DISTRIBUTION AND
SHAREHOLDER SERVICING FEE ARRANGEMENTS
The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act for each class of shares it offers that is subject to 12b-1 distribution fees. The plans allow each Fund to pay distribution and other fees for the sale and
distribution of its shares and for services provided to shareholders. The fees charged to the Funds are limited to the actual expenses incurred. Under the Class A plan, each Fund offering Class A shares pays an annual
fee not to exceed 0.25% of average daily net assets that are attributable to Class A shares. Under the Class C plan, each Fund offering Class C shares pays an annual fee not to exceed 1.00% of average daily net assets
that are attributable to Class C shares (of which up to 0.75% is a distribution fee and up to 0.25% is a shareholder servicing fee).
UNDERWRITING AGREEMENT
The Underwriter is the
Funds’ principal underwriter and, as such, acts as exclusive agent for distribution of the Funds’ shares. Under the terms of the Underwriting Agreement between the Trust and the Underwriter, the
Underwriter earned underwriting and broker commissions on the sale of Class A shares of the Funds. W&S Brokerage Services, Inc., an affiliate of the Underwriter and the Adviser, also earned broker commissions on
the sale of Class A shares of the Funds. Listed below are the total underwriting and broker commissions earned by the Underwriter and its affiliate during the six months ended December 31, 2022:
| Fund | Amount |
| Balanced Fund | $ 22,477 |
| Core Municipal Bond Fund | 104 |
| International Equity Fund | 694 |
| International Growth Fund | 46 |
| Large Cap Focused Fund | 14,586 |
| Large Cap Fund | 598 |
| Large Company Growth Fund | 365 |
| Small Company Fund | 6,579 |
| Value Fund | 1,994 |
56
Notes to Financial
Statements (Unaudited) (Continued)
In addition, the
Underwriter collected CDSC on the redemption of Class A and Class C shares of the Funds listed below during the six months ended December 31, 2022:
| Fund | Class A | Class C |
| Balanced Fund | $ — | $ 606 |
| Large Cap Focused Fund | 29 | 70 |
| Small Company Fund | 9 | 16 |
| Value Fund | — | 31 |
INTERFUND TRANSACTIONS
Pursuant to Rule 17a-7
under the 1940 Act, the Funds may engage in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), common Trustees and/or common Officers. During the six
months ended December 31, 2022, the Funds did not engage in any Rule 17a-7 transactions.
5. Liquidity
ReFlow Fund LLC — The Funds may participate in the ReFlow Fund LLC liquidity program (“ReFlow”), which is designed to provide an alternative liquidity source for funds experiencing
redemptions. In order to pay cash to shareholders who redeem their shares on a given day, a fund typically must hold cash in its portfolio, liquidate portfolio securities, or borrow money. ReFlow provides
participating funds with another source of cash by standing ready to purchase shares from a fund up to the amount of the fund’s net redemptions on a given day, cumulatively limited to 3% of the outstanding
voting shares of a Fund. ReFlow then generally redeems those shares (in cash or in-kind) when the Fund experiences net sales, at the end of a maximum holding period determined by ReFlow, or at other times at
ReFlow’s discretion. In return for this service, the Fund will pay a fee to ReFlow at a rate determined by a daily auction with other participating mutual funds.
During the six months
ended December 31, 2022, the following Funds utilized ReFlow. The shares ReFlow subscribed to and redemptions-in-kind were as follows:
| Fund | Shares ReFlow Subscribed to | Redemptions-in-kind |
| Large Cap Focused Fund | 2,076,790 | $ 84,552,621 |
| Large Cap Fund | 954,547 | 14,136,317 |
| Large Company Growth Fund | 326,038 | 9,895,085 |
| Small Company Fund | 4,938,195 | 14,948,558 |
Interfund Lending — Pursuant to an Exemptive Order issued by the SEC on March 28, 2017, the Funds, along with certain other funds in the Touchstone Fund Complex, may participate in an interfund
lending program. The interfund lending program provides an alternate credit facility that allows the Funds to lend to or borrow from other participating funds in the Touchstone Fund Complex, subject to the conditions
of the Exemptive Order. The Funds may not borrow under the facility for leverage purposes and the loans’ duration may be no more than 7 days.
During the six months
ended December 31, 2022, the following Fund participated as a lender in the interfund lending program. The daily average amount loaned, weighted average interest rate and interest income were as follows:
| Fund | Daily Average Amount Loaned | Weighted Average Interest Rate | Interest Income* |
| Large Cap Focused Fund | $ 64,824 | 4.22% | $ 1,410 |
| * | Included in Interest in the Statements of Operations. |
6. Federal Tax Information
Federal Income Tax — It is each Fund’s policy to continue to comply with the special provisions of the Internal Revenue Code applicable to regulated investment companies. As provided therein, in
any fiscal year in which a Fund so qualifies and distributes at least 90% of its investment company taxable income, the Fund (but not the shareholders) will be relieved of federal income tax on the income distributed.
It is each Fund’s policy to distribute all of its taxable and tax-exempt income and accordingly, no provision for income taxes has been made.
In order to avoid
imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare and pay as dividends in each calendar year at least 98% of its investment company taxable
income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ending October 31) plus undistributed amounts from prior years.
57
Notes to Financial
Statements (Unaudited) (Continued)
The tax character of
distributions paid for the years ended June 30, 2022 and June 30, 2021 are as follows:
| Balanced Fund | Core Municipal Bond Fund | International Equity Fund | ||||
| Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | |
| From ordinary income | $7,937,924 | $7,630,981 | $— | $— | $6,873,595 | $647,909 |
| From tax-exempt income | — | — | 1,004,748 | 1,211,675 | — | — |
| From long-term capital gains | 19,917,546 | 26,358,697 | 37,471 | 5,224 | 10,153,319 | — |
| Total distributions | $27,855,470 | $33,989,678 | $1,042,219 | $1,216,899 | $17,026,914 | $647,909 |
| International Growth Fund | Large Cap Focused Fund | Large Cap Fund | ||||
| Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | |
| From ordinary income | $362 | $— | $39,814,540 | $12,163,638 | $3,996,630 | $3,689,511 |
| From long-term capital gains | — | — | 170,287,074 | 94,020,901 | 6,966,746 | — |
| Total distributions | $362 | $— | $210,101,614 | $106,184,539 | $10,963,376 | $3,689,511 |
| Large Company Growth Fund | Small Company Fund | Value Fund | ||||
| Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | Year Ended June 30, 2022 | Year Ended June 30, 2021 | |
| From ordinary income | $2,681,389 | $1,164,162 | $48,143,409 | $842,597 | $15,794,980 | $4,536,512 |
| From long-term capital gains | 45,210,640 | 28,994,022 | 116,754,602 | — | 33,693,432 | 4,949,001 |
| Total distributions | $47,892,029 | $30,158,184 | $164,898,011 | $842,597 | $49,488,412 | $9,485,513 |
The following
information is computed on a tax basis for each item as of June 30, 2022:
| Balanced Fund | Core Municipal Bond Fund | International Equity Fund | International Growth Fund | Large Cap Focused Fund | |
| Tax cost of portfolio investments | $694,848,526 | $63,345,880 | $106,498,868 | $72,019,027 | $1,772,160,498 |
| Gross unrealized appreciation on investments | 131,765,907 | 230,106 | 13,697,620 | 6,502,668 | 850,074,984 |
| Gross unrealized depreciation on investments | (72,508,661) | (2,913,887) | (19,915,710) | (12,786,842) | (121,745,288) |
| Net unrealized appreciation (depreciation) on investments | 59,257,246 | (2,683,781) | (6,218,090) | (6,284,174) | 728,329,696 |
| Gross unrealized appreciation on foreign currency transactions | 13 | — | 2,748 | 278 | — |
| Gross unrealized depreciation on foreign currency transactions | — | — | (7,500) | (12,589) | — |
| Net unrealized appreciation (depreciation) on foreign currency transactions | 13 | — | (4,752) | (12,311) | — |
| Capital loss carryforwards | — | — | (65,508,598) | (6,386,751) | — |
| Qualified late year losses | (1,639,566) | (28,109) | (1,722,707) | — | — |
| Undistributed ordinary income | — | — | — | — | 12,237,564 |
| Undistributed capital gains | — | — | — | — | 26,814,957 |
| Other temporary differences | (3,957) | (8,041) | — | — | — |
| Accumulated earnings (deficit) | $57,613,736 | $(2,719,931) | $(73,454,147) | $(12,683,236) | $767,382,217 |
58
Notes to Financial
Statements (Unaudited) (Continued)
| Large Cap Fund | Large Company Growth Fund | Small Company Fund | Value Fund | |
| Tax cost of portfolio investments | $195,229,568 | $127,910,277 | $709,210,198 | $451,217,867 |
| Gross unrealized appreciation on investments | 94,149,687 | 43,178,848 | 127,289,870 | 87,497,177 |
| Gross unrealized depreciation on investments | (11,321,165) | (7,569,970) | (62,927,035) | (40,946,135) |
| Net unrealized appreciation (depreciation) on investments | 82,828,522 | 35,608,878 | 64,362,835 | 46,551,042 |
| Qualified late year losses | — | (174,283) | (890,599) | — |
| Undistributed ordinary income | 1,812,304 | — | — | 3,069,694 |
| Undistributed capital gains | 9,064,251 | 4,964,517 | 17,610,082 | 23,311,513 |
| Accumulated earnings (deficit) | $93,705,077 | $40,399,112 | $81,082,318 | $72,932,249 |
The difference
between the tax cost of portfolio investments and the financial statement cost is primarily due to wash sale loss deferrals, investments in passive foreign investment company (“PFIC”) adjustments, basis
adjustments on securities no longer treated as PFICs, callable bonds and nontaxable distribution basis outstanding.
As of June 30, 2022, the
International Equity Fund and International Growth Fund had the following capital loss carryforwards for federal income tax purposes:
| Fund | No Expiration Short Term | No Expiration Long Term | Total |
| International Equity Fund* | $ 34,975,398 | $ 30,533,200 | $ 65,508,598 |
| International Growth Fund* | 6,386,751 | — | 6,386,751 |
| * | Future utilization may be limited under current tax laws. |
The capital loss
carryforwards may be utilized in future years to offset net realized capital gains, if any, prior to distributing such gains to shareholders.
During the year ended
June 30, 2022, the following Fund utilized capital loss carryforwards:
| Fund | Utilized |
| International Equity Fund | $ 721,485 |
Under current laws,
certain capital losses realized after October 31 and ordinary losses realized after December 31 may be deferred (and certain ordinary losses after October and/or December 31 may be deferred) and treated as occurring
on the first day of the following fiscal year. For the year ended June 30, 2022, the following Funds elected to defer the following losses:
| Fund | Realized Capital Losses | Ordinary Losses | Total |
| Balanced Fund | $ 1,639,566 | $ — | $ 1,639,566 |
| Core Municipal Bond Fund | 28,109 | — | 28,109 |
| International Equity Fund | 1,722,707 | — | 1,722,707 |
| Large Company Growth Fund | — | 174,283 | 174,283 |
| Small Company Fund | — | 890,599 | 890,599 |
The Funds recognize
tax benefits or expenses of uncertain tax positions only when the position is "more likely than not" to be sustained assuming examination by tax authorities. Management of the Funds has reviewed tax positions taken in
tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., the previous three tax year ends and the interim tax period since then, as applicable) and has concluded that no
provision for unrecognized tax benefits or expenses is required in these financial statements and does not expect this to change over the next six months. The Funds recognize interest and penalties, if any, related to
unrecognized tax benefits in the Statements of Operations. During the period, the Funds did not incur any interest or penalties.
As of December 31, 2022,
the Trust had federal tax costs resulting in net unrealized appreciation (depreciation) as follows:
| Fund | Federal Tax Cost | Gross Unrealized Appreciation on Investments | Gross Unrealized Depreciation on Investments | Gross Unrealized Appreciation on Other(A) | Gross Unrealized Depreciation on Other(A) | Net Unrealized Appreciation (Depreciation) |
| Balanced Fund | $666,761,546 | $146,050,259 | $(79,806,644) | $12 | $(39) | $66,243,588 |
| Core Municipal Bond Fund | 55,771,603 | 304,912 | (2,526,064) | — | — | (2,221,152) |
59
Notes to Financial
Statements (Unaudited) (Continued)
| Fund | Federal Tax Cost | Gross Unrealized Appreciation on Investments | Gross Unrealized Depreciation on Investments | Gross Unrealized Appreciation on Other(A) | Gross Unrealized Depreciation on Other(A) | Net Unrealized Appreciation (Depreciation) |
| International Equity Fund | $97,481,154 | $12,190,531 | $(9,603,569) | $5 | $(16,398) | $2,570,569 |
| International Growth Fund | 58,216,338 | 6,632,240 | (7,305,406) | 13 | (8,020) | (681,173) |
| Large Cap Focused Fund | 1,733,493,896 | 885,085,113 | (132,911,937) | — | — | 752,173,176 |
| Large Cap Fund | 173,584,845 | 101,573,584 | (4,803,766) | — | — | 96,769,818 |
| Large Company Growth Fund | 118,047,811 | 36,221,795 | (5,800,634) | — | — | 30,421,161 |
| Small Company Fund | 684,128,035 | 175,368,438 | (28,591,624) | — | — | 146,776,814 |
| Value Fund | 435,427,748 | 116,994,814 | (30,495,113) | — | — | 86,499,701 |
| (A) | Other includes Foreign Currency Transactions. | |
7. Commitments and
Contingencies
The Funds indemnify
the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that
contain a variety of representations and warranties and which provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made
against the Funds.
8. Principal Risks
Risks Associated with
Foreign Investments – Some of the Funds may invest in the securities of foreign issuers. Investing in securities issued by companies whose principal business activities are outside the U.S. may involve
significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitations on the removal
of funds or other assets of a Fund, political or financial instability or diplomatic and other developments which could affect such investments. Political and military events, including in China, North Korea,
Venezuela, Russia, Ukraine, Iran, Syria, and other areas of the Middle East, and nationalist unrest in Europe and South America, may cause market disruptions. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the U.S., and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers, and issuers than in the U.S.
Risks Associated with
Sector Concentration – Certain Funds may invest a high percentage of their assets in specific sectors of the market in order to achieve a potentially greater investment return. As a result, these Funds
may be more susceptible to economic, political, and regulatory developments in a particular sector of the market, positive or negative, and may experience increased volatility in the Funds' NAVs and magnified effect
on the total return.
Risks Associated with
Credit – An issuer may be unable to make timely payments of either principal or interest. This may cause the issuer’s securities to decline in value. Credit risk is particularly
relevant to those Funds that invest a significant amount of their assets in junk bonds or lower-rated securities.
Risks Associated with
Cyber Security - With the increased use of technologies, such as mobile devices and "cloud"-based service offerings and the dependence on the Internet and computer systems to perform necessary business
functions, the Funds' service providers are susceptible to cyber security risks that could result in losses to a Fund and its shareholders. Cyber security breaches are either intentional or unintentional events that
allow an unauthorized party to gain access to Fund assets, customer data, or proprietary information, or cause a Fund or Fund service provider to suffer data corruption or lose operational functionality. A cyber
security breach could result in the loss or theft of customer data or funds, loss or theft of proprietary information or corporate data, physical damage to a computer or network system, or costs associated with system
repairs, any of which could have a substantial impact on a Fund. Cyber security incidents could cause a Fund, the Adviser, a Sub-Adviser, or other service provider to incur regulatory penalties, reputational damage,
compliance costs associated with corrective measures, litigation costs, or financial loss. They may also result in violations of applicable privacy and other laws. In addition, such incidents could affect issuers in
which a Fund invests, thereby causing the Fund’s investments to lose value.
Risks Associated with
Interest Rate Changes – The price of debt securities is generally linked to the prevailing market interest rates. In general, when interest rates rise, the price of debt securities falls, and when
interest rates fall, the price of debt securities rises. The price volatility of a debt security also depends on its maturity. Longer-term securities are generally more volatile, so the
60
Notes to Financial
Statements (Unaudited) (Continued)
longer the average maturity or
duration of these securities, the greater their price risk. Duration is a measure of the expected life, taking into account any prepayment or call features of the security, that is used to determine the price
sensitivity of the security for a given change in interest rates. Specifically, duration is the change in the value of a fixed-income security that will result from a 1% change in interest rates, and generally is
stated in years. For example, as a general rule a 1% rise in interest rates means a 1% fall in value for every year of duration. Maturity, on the other hand, is the date on which a fixed-income security becomes due
for payment of principal. An increase in interest rates could negatively impact a Fund’s NAV. Recent and potential future changes in government monetary policy may affect interest rates. As the U.S.
Federal Reserve "tapers" or reduces the amount of securities it purchases pursuant to its quantitative easing program, and/or raises the federal funds target rate, there is a heightened risk that interest rates will
rise, which could expose fixed-income and related markets to heightened volatility and could cause the value of a Fund's investments, and the Fund's NAV, to decline, potentially suddenly and significantly, which may
negatively impact the Fund's performance.
Risks Associated with
Health Crises – A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, which may lead to less liquidity in
certain instruments, industries, sectors or the markets generally, and may ultimately affect Fund performance. For example, the COVID-19 pandemic has resulted and may continue to result in significant disruptions to
global business activity and market volatility due to disruptions in market access, resource availability, facilities operations, imposition of tariffs, export controls and supply chain disruption, among others. The
impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate
other pre-existing political, social and economic risks. Any such impact could adversely affect a Fund's performance, resulting in losses to your investment.
Please see the
Funds’ prospectus and statement of additional information for a complete discussion of these and other risks.
9. Fund Share Transactions
At a meeting of the
Board held on August 18, 2022, the Adviser proposed, and the Board approved, a reverse stock split of the Small Company Fund's issued and outstanding Class C shares (the "Reverse Stock Split"). The Reverse Stock Split
was completed on October 14, 2022 (the "Effective Date"). As a result of the Reverse Stock Split, for each Class C share of the Fund that a shareholder owned as of the Effective Date, the shareholder received a
proportional number of Class C shares of the Fund with the same aggregate dollar value. Thus, the total dollar value of an investment in the Fund was unchanged and each shareholder continued to own the same percentage
(by value) of the Fund immediately following the Reverse Stock Split as the shareholder owned immediately prior to the Reverse Stock Split. The Reverse Stock Split was not a taxable event, nor did it have an impact on
the Fund's holdings or its performance. The Reverse Stock Split was carried out in accordance with a stock split ratio of 1 to 0.379048, calculated to result in a net asset value per share that better aligns the share
class prices of the Fund. The shares outstanding, NAV per share and other per share information have been updated in the accompanying financial statements and the financial highlights to reflect the effect of the
Reverse Stock Split.
10. Subsequent Events
Subsequent events
occurring after the date of this report have been evaluated for potential impact to this report through the date the financial statements were issued. There were no subsequent events that necessitated recognition or
disclosure in the Funds’ financial statements.
61
Other Items (Unaudited)
Proxy Voting Guidelines and Proxy
Voting Records
The Sub-Advisers are
responsible for exercising the voting rights associated with the securities purchased and held by the Funds. A description of the policies and procedures that the Sub-Advisers use in fulfilling this responsibility is
available as an appendix to the most recent Statement of Additional Information, which can be obtained without charge by calling toll free 1.800.543.0407 or by visiting the Touchstone website at
TouchstoneInvestments.com or on the Securities and Exchange Commission’s (the “Commission”) website sec.gov. Information regarding how those proxies were voted during the most recent twelve-month
period ended June 30, which will be filed by August 31 of that year, is also available without charge by calling toll free 1.800.543.0407 or on the Commission’s website at sec.gov.
Quarterly Portfolio Disclosure
Each Fund’s
holdings as of the end of the third month of every fiscal quarter will be disclosed on Form N-PORT within 60 days of the end of the fiscal quarter. The complete listing of each Fund’s portfolio holdings is
available on the Commission’s website and will be made available to shareholders upon request by calling 1.800.543.0407.
Schedule of Shareholder Expenses
As a shareholder of
the Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) and (2) ongoing costs, including investment advisory fees; shareholder servicing fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on
an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2022 through December 31, 2022).
Actual Expenses
The first line for
each share class of a Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the
expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under
the heading entitled “Expenses Paid During the Six Months Ended December 31, 2022” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison
Purposes
The second line for
each share class of a Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You
may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the
expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line for each share class of a Fund in
the table below is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would
have been higher.
| Net Expense Ratio Annualized December 31, 2022 | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During the Six Months Ended December 31, 2022* | ||
| Balanced Fund | |||||
| Class A | Actual | 1.01% | $1,000.00 | $1,010.50 | $5.12 |
| Class A | Hypothetical | 1.01% | $1,000.00 | $1,020.11 | $5.14 |
| Class C | Actual | 1.77% | $1,000.00 | $1,006.80 | $8.95 |
| Class C | Hypothetical | 1.77% | $1,000.00 | $1,016.28 | $9.00 |
| Class Y | Actual | 0.79% | $1,000.00 | $1,011.70 | $4.01 |
62
Other Items (Unaudited) (Continued)
| Net Expense Ratio Annualized December 31, 2022 | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During the Six Months Ended December 31, 2022* | ||
| Class Y | Hypothetical | 0.79% | $1,000.00 | $1,021.22 | $4.02 |
| Class R6 | Actual | 0.64% | $1,000.00 | $1,012.50 | $3.25 |
| Class R6 | Hypothetical | 0.64% | $1,000.00 | $1,021.98 | $3.26 |
| Core Municipal Bond Fund | |||||
| Class A | Actual | 0.80% | $1,000.00 | $1,001.40 | $4.04 |
| Class A | Hypothetical | 0.80% | $1,000.00 | $1,021.17 | $4.08 |
| Class C | Actual | 1.55% | $1,000.00 | $997.70 | $7.80 |
| Class C | Hypothetical | 1.55% | $1,000.00 | $1,017.39 | $7.88 |
| Class Y | Actual | 0.55% | $1,000.00 | $1,003.70 | $2.78 |
| Class Y | Hypothetical | 0.55% | $1,000.00 | $1,022.43 | $2.80 |
| Institutional Class | Actual | 0.48% | $1,000.00 | $1,003.10 | $2.42 |
| Institutional Class | Hypothetical | 0.48% | $1,000.00 | $1,022.79 | $2.45 |
| International Equity Fund | |||||
| Class A | Actual | 1.36% | $1,000.00 | $1,000.00 | $6.86 |
| Class A | Hypothetical | 1.36% | $1,000.00 | $1,018.35 | $6.92 |
| Class C | Actual | 1.99% | $1,000.00 | $1,000.00 | $10.03 |
| Class C | Hypothetical | 1.99% | $1,000.00 | $1,015.17 | $10.11 |
| Class Y | Actual | 0.99% | $1,000.00 | $1,000.00 | $4.99 |
| Class Y | Hypothetical | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| Institutional Class | Actual | 0.89% | $1,000.00 | $1,000.00 | $4.49 |
| Institutional Class | Hypothetical | 0.89% | $1,000.00 | $1,020.72 | $4.53 |
| International Growth Fund | |||||
| Class A | Actual | 1.24% | $1,000.00 | $986.30 | $6.21 |
| Class A | Hypothetical | 1.24% | $1,000.00 | $1,018.95 | $6.31 |
| Class C | Actual | 1.99% | $1,000.00 | $982.10 | $9.94 |
| Class C | Hypothetical | 1.99% | $1,000.00 | $1,015.17 | $10.11 |
| Class Y | Actual | 0.99% | $1,000.00 | $987.10 | $4.96 |
| Class Y | Hypothetical | 0.99% | $1,000.00 | $1,020.21 | $5.04 |
| Institutional Class | Actual | 0.89% | $1,000.00 | $987.70 | $4.46 |
| Institutional Class | Hypothetical | 0.89% | $1,000.00 | $1,020.72 | $4.53 |
| Large Cap Focused Fund | |||||
| Class A | Actual | 1.02% | $1,000.00 | $1,026.30 | $5.21** |
| Class A | Hypothetical | 1.02% | $1,000.00 | $1,020.06 | $5.19** |
| Class C | Actual | 1.81% | $1,000.00 | $1,022.40 | $9.23** |
| Class C | Hypothetical | 1.81% | $1,000.00 | $1,016.08 | $9.20** |
| Class Y | Actual | 0.74% | $1,000.00 | $1,027.90 | $3.78** |
| Class Y | Hypothetical | 0.74% | $1,000.00 | $1,021.48 | $3.77** |
| Institutional Class | Actual | 0.71% | $1,000.00 | $1,028.00 | $3.63** |
| Institutional Class | Hypothetical | 0.71% | $1,000.00 | $1,021.63 | $3.62** |
| Class R6 | Actual | 0.67% | $1,000.00 | $1,028.00 | $3.42** |
| Class R6 | Hypothetical | 0.67% | $1,000.00 | $1,021.83 | $3.41** |
| Large Cap Fund | |||||
| Class A | Actual | 1.05% | $1,000.00 | $1,049.70 | $5.42*** |
| Class A | Hypothetical | 1.05% | $1,000.00 | $1,019.91 | $5.35*** |
| Class C | Actual | 1.80% | $1,000.00 | $1,046.50 | $9.28*** |
| Class C | Hypothetical | 1.80% | $1,000.00 | $1,016.13 | $9.15*** |
| Class Y | Actual | 0.80% | $1,000.00 | $1,051.00 | $4.14*** |
| Class Y | Hypothetical | 0.80% | $1,000.00 | $1,021.17 | $4.08*** |
| Institutional Class | Actual | 0.70% | $1,000.00 | $1,052.00 | $3.62*** |
| Institutional Class | Hypothetical | 0.70% | $1,000.00 | $1,021.68 | $3.57*** |
| Large Company Growth Fund | |||||
| Class A | Actual | 1.07% | $1,000.00 | $995.80 | $5.38**** |
| Class A | Hypothetical | 1.07% | $1,000.00 | $1,019.81 | $5.45**** |
| Class C | Actual | 1.82% | $1,000.00 | $992.00 | $9.14**** |
| Class C | Hypothetical | 1.82% | $1,000.00 | $1,016.03 | $9.25**** |
| Class Y | Actual | 0.82% | $1,000.00 | $997.00 | $4.13**** |
| Class Y | Hypothetical | 0.82% | $1,000.00 | $1,021.07 | $4.18**** |
| Institutional Class | Actual | 0.72% | $1,000.00 | $997.50 | $3.63**** |
| Institutional Class | Hypothetical | 0.72% | $1,000.00 | $1,021.58 | $3.67**** |
63
Other Items (Unaudited) (Continued)
| Net Expense Ratio Annualized December 31, 2022 | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During the Six Months Ended December 31, 2022* | ||
| Small Company Fund | |||||
| Class A | Actual | 1.19% | $1,000.00 | $1,086.00 | $6.26***** |
| Class A | Hypothetical | 1.19% | $1,000.00 | $1,019.21 | $6.06***** |
| Class C | Actual | 1.96% | $1,000.00 | $1,084.80 | $10.30***** |
| Class C | Hypothetical | 1.96% | $1,000.00 | $1,015.32 | $9.96***** |
| Class Y | Actual | 0.90% | $1,000.00 | $1,088.70 | $4.74***** |
| Class Y | Hypothetical | 0.90% | $1,000.00 | $1,020.67 | $4.58***** |
| Institutional Class | Actual | 0.80% | $1,000.00 | $1,090.70 | $4.22***** |
| Institutional Class | Hypothetical | 0.80% | $1,000.00 | $1,021.17 | $4.08***** |
| Class R6 | Actual | 0.80% | $1,000.00 | $1,088.50 | $4.21***** |
| Class R6 | Hypothetical | 0.80% | $1,000.00 | $1,021.17 | $4.08***** |
| Value Fund | |||||
| Class A | Actual | 1.08% | $1,000.00 | $1,081.30 | $5.67 |
| Class A | Hypothetical | 1.08% | $1,000.00 | $1,019.76 | $5.50 |
| Class C | Actual | 1.83% | $1,000.00 | $1,077.60 | $9.58 |
| Class C | Hypothetical | 1.83% | $1,000.00 | $1,015.98 | $9.30 |
| Class Y | Actual | 0.83% | $1,000.00 | $1,083.30 | $4.36 |
| Class Y | Hypothetical | 0.83% | $1,000.00 | $1,021.02 | $4.23 |
| Institutional Class | Actual | 0.68% | $1,000.00 | $1,084.50 | $3.57 |
| Institutional Class | Hypothetical | 0.68% | $1,000.00 | $1,021.78 | $3.47 |
| Class R6 | Actual | 0.63% | $1,000.00 | $1,084.40 | $3.31 |
| Class R6 | Hypothetical | 0.63% | $1,000.00 | $1,022.03 | $3.21 |
| * | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period). |
| ** | Excluding liquidity provider expenses, your actual cost of investment in Class A, Class C, Class Y, Institutional Class and Class R6 would be $5.11, $9.12, $3.68, $3.53 and $3.32, respectively, and your hypothetical cost of investment in Class A, Class C, Class Y, Institutional Class and Class R6 would be $5.09, $9.10, $3.67, $3.52 and $3.31, respectively. |
| *** | Excluding liquidity provider expenses, your actual cost of investment in Class A, Class C, Class Y and Institutional Class would be $5.32, $9.18, $4.03 and $3.52, respectively, and your hypothetical cost of investment in Class A, Class C, Class Y and Institutional Class would be $5.24, $9.05, $3.97 and $3.47, respectively. |
| **** | Excluding liquidity provider expenses, your actual cost of investment in Class A, Class C, Class Y and Institutional Class would be $5.23, $8.99, $3.98 and $3.47, respectively, and your hypothetical cost of investment in Class A, Class C, Class Y and Institutional Class would be $5.29, $9.10, $4.02 and $3.52, respectively. |
| ***** | Excluding liquidity provider expenses, your actual cost of investment in Class A, Class C, Class Y, Institutional Class and Class R6 would be $6.26, $10.25, $4.69, $4.16 and $4.16, respectively, and your hypothetical cost of investment in Class A, Class C, Class Y, Institutional Class and Class R6 would be $6.06, $9.91, $4.53, $4.02 and $4.02, respectively. |
Liquidity Risk Management
The Funds have adopted
and implemented a written liquidity risk management program (the “LRM Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that each Fund adopt a program that
is reasonably designed to assess and manage the Funds’ liquidity risk, which is the risk that a Fund could not meet redemption requests without significant dilution of remaining investors’ interests in a
Fund.
Assessment and
management of a Fund’s liquidity risk under the LRM Program takes into consideration certain factors, such as a Fund’s investment strategy and the liquidity of its portfolio investments during normal and
reasonably foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to
other funding sources. As required by the rule, the LRM Program includes policies and procedures for classification of Fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid
investments, and limiting holdings of illiquid investments.
The Board of Trustees
of the Trust approved the appointment of a LRM Program administrator responsible for administering the LRM Program and for carrying out the specific responsibilities set forth in the LRM Program, including reporting
to the Board on at least an annual basis regarding the LRM Program’s operation, its adequacy, and the effectiveness of its implementation for the past year (the “Program Administrator Report”). The
Board has reviewed the Program Administrator Report covering the period from May 15, 2021 through May 12, 2022 (the “Review Period”). The Program Administrator Report stated that during the Review Period
the LRM Program operated adequately and effectively in promoting effective liquidity risk management for the Funds.
Advisory and Sub-Advisory Agreement
Approval Disclosure
At a meeting held on
November 17, 2022, the Board of Trustees (the “Board” or “Trustees”) of the Touchstone Strategic Trust (the “Trust”), and by a separate vote, the Independent Trustees of the Trust,
approved the continuance of the Investment Advisory
64
Other Items (Unaudited) (Continued)
Agreement between the Trust and the
Advisor with respect to each Fund of the Trust, and the continuance of the Sub-Advisory Agreement between the Advisor and each Fund’s respective Sub-Advisor.
In determining whether
to approve the continuation of the Investment Advisory Agreement and the Sub-Advisory Agreements, the Advisor furnished information necessary for a majority of the Independent Trustees to make the determination that
the continuance of the Investment Advisory Agreement and each Sub-Advisory Agreement was in the best interests of the respective Funds and their shareholders. The information provided to the Board included: (1)
industry data comparing advisory fees and total expense ratios of comparable funds; (2) comparative performance information; (3) the Advisor’s and its affiliates’ revenues and costs of providing services
to the Funds; and (4) information about the Advisor’s and Sub-Advisors’ personnel. Prior to voting, the Independent Trustees reviewed the proposed continuance of the Investment Advisory Agreement and the
Sub-Advisory Agreements with management and experienced independent legal counsel and received materials from such counsel discussing the legal standards for their consideration of the proposed continuation of the
Investment Advisory Agreement and each Sub-Advisory Agreement. The Independent Trustees also reviewed the proposed continuation of the Investment Advisory Agreement and each Sub-Advisory Agreement with independent
legal counsel in private sessions at which no representatives of management were present.
In approving the
Funds’ Investment Advisory Agreement, the Board considered various factors, among them: (1) the nature, extent and quality of services provided to the Funds, including the personnel providing such services; (2)
the Advisor's compensation and profitability; (3) a comparison of fees and performance with comparable funds; (4) economies of scale; and (5) the terms of the Investment Advisory Agreement. The Board's analysis of
these factors is set forth below. The Independent Trustees were advised by independent legal counsel throughout the process.
Nature, Extent and
Quality of Advisor Services. The Board considered the level and depth of knowledge of the Advisor, including the professional experience and qualifications of senior personnel. In evaluating the quality of services
provided by the Advisor, the Board took into account its familiarity with the Advisor’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into
account the Advisor’s compliance policies and procedures. The quality of administrative and other services, including the Advisor’s role in coordinating the activities of the Funds’ other service
providers, was also considered. The Board also considered the Advisor’s relationship with its affiliates and the resources available to them, as well as any potential conflicts of interest.
The Board discussed
the Advisor’s effectiveness in monitoring the performance of each Sub-Advisor, including the one that was an affiliate of the Advisor, and the Advisor’s timeliness in responding to performance issues. The
Board considered the Advisor’s process for monitoring each of the Sub-Advisors, which includes an examination of both qualitative and quantitative elements of the Sub-Advisor’s organization, personnel,
procedures, investment discipline, infrastructure and performance. The Board considered that the Advisor conducts periodic due diligence of each Sub-Advisor, during which the Advisor examines a wide variety of
factors, such as the financial condition of the Sub-Advisor, the quality of the Sub-Advisor’s systems, the effectiveness of the Sub-Advisor’s disaster recovery programs, trade allocation and execution
procedures, compliance with the Sub-Advisor’s policies and procedures, results of regulatory examinations and any other factors that might affect the quality of services that the Sub-Advisor provides to the
applicable Fund. The Board noted that the Advisor’s monitoring processes also include quarterly reviews of compliance certifications, and that any issues arising from such reviews and the Advisor’s due
diligence reviews of the Sub-Advisors are reported to the Board.
The Trustees concluded
that they were satisfied with the nature, extent and quality of services provided to each Fund by the Advisor under the Investment Advisory Agreement.
Advisor’s
Compensation and Profitability. The Board took into consideration the financial condition and profitability of the Advisor and its affiliates (including the affiliated Sub-Advisor to certain of the Funds) and the direct
and indirect benefits derived by the Advisor and its affiliates from the Advisor’s relationship with the Funds. The information considered by the Board included operating profit margin information for the
Advisor’s business as a whole. The Board noted that the Advisor had waived a portion of advisory fees and administrative fees and/or reimbursed expenses in order to limit each Funds’ net operating
expenses. The Board also noted that the Advisor pays the Sub-Advisors’ sub-advisory fees out of the advisory fees the Advisor receives from the Funds. The Board reviewed the profitability of the Advisor’s
relationship with the Funds both before and after tax expenses, and also considered whether the Advisor has the financial wherewithal to continue to provide services to the Funds, noting the ongoing commitment of the
Advisor’s parent company with respect to providing support and resources as needed. The Board considered that certain affiliates of the Advisor and the Funds’ distributor receive Rule 12b-1 distribution
fees and shareholder service fees that are paid from Fund assets. The Board also noted that the Advisor derives benefits to its reputation and other benefits from its association with the Funds.
The Board recognized
that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to each Fund and the entrepreneurial risk that it assumes as Advisor. Based upon their
review, the Trustees concluded that the Advisor’s and its affiliates’ level of profitability, if any, from their relationship with each Fund was reasonable and not excessive.
65
Other Items (Unaudited) (Continued)
Expenses and
Performance. The Board compared the respective advisory fees and total expense ratios for each of the Funds with various comparative data, including the median and average advisory fees and total
expense ratios of each Fund’s respective peer group. The Board also considered, among other data, the Funds’ respective performance results during the six-month, twelve-month and thirty-six-month periods
ended September 30, 2022 and noted that the Board reviews on a quarterly basis detailed information about each Fund’s performance results, portfolio composition and investment strategies. The Board also took
into account current market conditions and their effect on the Funds’ performance.
The Board also
considered the effect of each Fund’s growth and size on its performance and expenses. The Board noted that the Advisor had waived a portion of the fees and/or reimbursed expenses of Funds in order to reduce
those Funds’ respective operating expenses to targeted levels. The Board noted that the sub-advisory fees under the Sub-Advisory Agreement with respect to each Fund were paid by the Advisor out of the advisory
fees it receives from the Fund and considered the impact of such sub-advisory fees on the profitability of the Advisor. In reviewing the respective total expense ratios and performance of each of the Funds, the Board
also took into account the nature, extent and quality of the services provided to the Funds by the Advisor and its affiliates.
The Board considered,
among other data, the specific factors and related conclusions set forth below with respect to each Fund:
Touchstone Balanced Fund. The Fund’s advisory fee and total expense ratio were below the median and above the median, respectively, of its peer group. The Fund’s
performance for the six-month period ended September 30, 2022 was in the 5th quintile of its peer group, the Fund’s performance for the twelve-month period ended September 30, 2022 was in the 4th quintile of its
peer group, and the Fund’s performance for the thirty-six-month period ended September 30, 2022 was in the 1st quintile of its peer group. The Board noted management’s discussion of the Fund’s recent
performance. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to the performance of funds with similar investment objectives and relevant indices, and
that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors considered.
Touchstone Core Municipal Bond Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were each at the median of
its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the six- and thirty-six-month
periods ended September 30, 2022 was in the 4th quintile of its peer group, while the Fund’s performance for the twelve-month period ended September 30, 2022 was in the 3rd quintile of its peer group. The Board
took into consideration management’s discussion of the Fund’s thirty-six-month period performance, noting that the current Sub-Advisor had assumed responsibility for the day-to-day management of the Fund
using a new investment strategy beginning on October 28, 2021. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to the performance of funds with
similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors considered.
Touchstone International Equity Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were below the median and
above the median, respectively, of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of
the six-, twelve- and thirty-six-month periods ended September 30, 2022 was in the 2nd quintile of its peer group. Based upon their review, the Trustees concluded that the Fund’s overall performance was
satisfactory relative to the performance of funds with similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and
the other factors considered.
Touchstone International Growth Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were at the median and above
the median, respectively, of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the
six- and twelve-month periods ended September 30, 2022 was in the 3rd quintile of its peer group, while the Fund’s performance for the thirty-six-month period ended September 30, 2022 was in the 5th quintile of
its peer group. The Board noted management’s discussion of the Fund’s thirty-six-month period performance. Based upon their review, the Trustees concluded that the Fund’s overall performance was
satisfactory relative to the performance of funds with similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and
the other factors considered.
Touchstone Large Cap Focused Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were below the median and above
the median, respectively, of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the
six- and twelve-month periods ended September 30, 2022 was in the 4th quintile of its peer group, while the Fund’s performance for the thirty-six-month period ended September 30, 2022 was in the 1st quintile of
its peer group. The Board noted management’s discussion of the Fund’s recent performance. Based upon their review, the Trustees concluded that the Fund’s overall performance
66
Other Items (Unaudited) (Continued)
was satisfactory relative to the
performance of funds with similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors
considered.
Touchstone Large Cap Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were at the median and below the
median, respectively, of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the six-
and twelve-month periods ended September 30, 2022 was in the 2nd quintile, while the Fund’s performance for the thirty-six-month period ended September 30, 2022 was in the 5th quintile of its peer group. The
Board noted management’s discussion of the Fund’s thirty-six-month period performance. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to
the performance of funds with similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors
considered.
Touchstone Large Company Growth Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were each below the median
of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the twelve- and
thirty-six-month periods ended September 30, 2022 was in the 3rd quintile of its peer group, while the Fund’s performance for the six-month period ended September 30, 2022 was in the 2nd quintile of its peer
group. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to the performance of funds with similar investment objectives and relevant indices, and that
the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors considered.
Touchstone Small Company Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were each below the median of its
peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for the six-month period ended September 30, 2022
was in the 2nd quintile of its peer group, the Fund’s performance for the twelve-month period ended September 30, 2022 was in the 3rd quintile of its peer group and the Fund’s performance for the
thirty-six-month period ended September 30, 2022 was in the 1st quintile of its peer group. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to the
performance of funds with similar investment objectives and relevant indices, and that the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors
considered.
Touchstone Value Fund. The Fund’s advisory fee and total expense ratio (net of applicable expense waivers and reimbursements) were at the median and above the median,
respectively, of its peer group. The Board noted that the Advisor was currently waiving and/or reimbursing a portion of the Fund’s fees and/or expenses. The Fund’s performance for each of the six- and
twelve-month periods ended September 30, 2022 was in the 2nd quintile of its peer group, while the Fund’s performance for the thirty-six-month period ended September 30, 2022 was in the 3rd quintile of its peer
group. Based upon their review, the Trustees concluded that the Fund’s overall performance was satisfactory relative to the performance of funds with similar investment objectives and relevant indices, and that
the advisory fee was reasonable in light of the services received by the Fund from the Advisor and the other factors considered.
Economies of
Scale. The Board considered the effect of each Fund’s current size and potential growth on its performance and expenses. The Board took into account management’s discussion of the
Funds’ advisory fee structure. The Board considered the effective advisory fees under the Investment Advisory Agreement as a percentage of assets at different asset levels and possible economies of scale that
might be realized if the assets of each Fund increase. The Board noted that the advisory fee schedules for all but one of the Funds contain breakpoints that would reduce the respective advisory fee rate on assets
above specified levels as the respective Fund’s assets increased and considered the necessity of adding breakpoints with respect to the one Fund that did not currently have such breakpoints in its advisory fee
schedule. The Board determined that adding breakpoints at specified levels to the advisory fee schedules of the one Fund that currently did not have such breakpoints was not appropriate at that time. The Board also
noted that if a Fund’s assets increase over time, the Fund might realize other economies of scale if assets increase proportionally more than certain other expenses. The Board also considered the fact that,
under the Investment Advisory Agreement, the advisory fee payable to the Advisor by a Fund was reduced by the total sub-advisory fee paid by the Advisor to the Fund’s Sub-Advisor.
Conclusion. In considering the renewal of the Funds’ Investment Advisory Agreement, the Board, including the Independent Trustees, did not identify any single factor as controlling, and each
Trustee may have attributed different weights to the various factors. The Trustees evaluated all information available to them on a Fund-by-Fund basis, and their determinations were made separately with respect to
each Fund. The Board reached the following conclusions regarding the Funds’ Investment Advisory Agreement with the Advisor, among others: (a) the Advisor demonstrated that it possesses the capability and
resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Advisor maintains an appropriate compliance program; (c) the overall performance of each Fund is satisfactory relative to
the performance of funds with similar investment objectives and relevant indices; and (d) each Fund's advisory fee is reasonable in light of the services received by the Fund from the Advisor and the other factors
considered. Based on their conclusions, the Trustees determined with respect to each Fund that continuation of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders.
67
Other Items (Unaudited) (Continued)
In approving the
Funds’ respective Sub-Advisory Agreements, the Board considered various factors with respect to each Fund and the applicable Sub-Advisory Agreement, among them: (1) the nature, extent and quality of services
provided to the Fund, including the personnel providing such services; (2) the Sub-Advisor's compensation; (3) a comparison of the sub-advisory fee and performance with comparable funds; and (4) the terms of the
Sub-Advisory Agreement. The Board's analysis of these factors is set forth below. The Independent Trustees were advised by independent legal counsel throughout the process.
Nature, Extent and
Quality of Services Provided; Investment Personnel. The Board considered information provided by the Advisor regarding the services provided by each Sub-Advisor, including information presented periodically throughout the previous year. The
Board noted the affiliation of the Sub-Advisor to certain of the Funds with the Advisor, noting any potential conflicts of interest. The Board noted that, on a periodic basis, the Board meets with portfolio managers
of the Sub-Advisors to discuss their respective performance and investment processes and strategies. The Board also considered each Sub-Advisor's level of knowledge and investment style. The Board reviewed the
experience and credentials of the applicable investment personnel who are responsible for managing the investment of portfolio securities with respect to the Funds. The Board also noted each Sub-Advisor's brokerage
practices.
Sub-Advisor’s
Compensation, Profitability and Economies of Scale. The Board also took into consideration the financial condition of each Sub-Advisor and any indirect benefits derived by each Sub-Advisor and its affiliates from the Sub-Advisor’s
relationship with the Funds. In considering the profitability to each Sub-Advisor of its relationship with the Funds, the Board noted the undertaking of the Advisor to maintain expense limitations for the Funds and
also noted that the sub-advisory fees under the Sub-Advisory Agreements were paid by the Advisor out of the advisory fees that it receives under the Investment Advisory Agreement and in addition, with respect to the
unaffiliated Sub-Advisors, are negotiated at arm’s-length. As a consequence, the profitability to each Sub-Advisor of its relationship with a Fund was not a substantial factor in the Board's deliberations. For
similar reasons, the Board did not consider the potential economies of scale in each Sub-Advisor's management of the applicable Fund to be a substantial factor in its consideration, although the Board noted that the
sub-advisory fee schedule for all but one Fund contained breakpoints that would reduce the sub-advisory fee rate on assets above specified levels as the applicable Fund's assets increased.
Sub-Advisory Fees and
Fund Performance. The Board considered that each Fund pays an advisory fee to the Advisor and that the Advisor pays the sub-advisory fee to the Sub-Advisor out of the advisory fee it receives from the
respective Fund. The Board noted that the Touchstone Core Municipal Bond Fund’s Sub-Advisor and the Touchstone International Growth Fund’s Sub-Advisor each had waived a portion of its sub-advisory fees in
an effort to maintain the respective Fund’s expense limitations. The Board also compared the sub-advisory fees paid by the Advisor to fees charged by each Sub-Advisor to manage comparable institutional separate
accounts, as applicable. The Board considered the amount retained by the Advisor and the sub-advisory fee paid to each Sub-Advisor with respect to the various services provided by the Advisor and the Sub-Advisor. The
Board also noted that the Advisor negotiated the sub-advisory fee with each of the unaffiliated Sub-Advisors at arm’s-length. The Board reviewed the sub-advisory fee for each Fund in relation to various
comparative data, including the median and average sub-advisory fees of each Fund’s peer group, and considered the following information:
Touchstone Balanced Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the sub-advisory fee
was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone Core Municipal Bond Fund. The Fund’s sub-advisory fee was above the median of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone International Equity Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone International Growth Fund. The Fund’s sub-advisory fee was at the median of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone Large Cap Focused Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone Large Cap Fund. The Fund’s sub-advisory fee was above the median of its peer group. Based upon their review, the Trustees concluded that the sub-advisory fee
was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
68
Other Items (Unaudited) (Continued)
Touchstone Large Company Growth Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone Small Company Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the sub-advisory
fee was reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
Touchstone Value Fund. The Fund’s sub-advisory fee was below the median of its peer group. Based upon their review, the Trustees concluded that the sub-advisory fee was
reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors considered.
As noted above, the
Board considered each Fund’s performance during the six-month, twelve-month and thirty-six-month periods ended September 30, 2022, as compared to each Fund’s peer group and noted that the Board reviews on
a quarterly basis detailed information about each Fund’s performance results, portfolio composition and investment strategies. The Board also noted the Advisor’s expertise and resources in monitoring the
performance, investment style and risk-adjusted performance of each Sub-Advisor. The Board also was mindful of the Advisor’s ongoing monitoring of each Sub-Advisor’s performance and the measures undertaken
by the Advisor to address any underperformance.
Conclusion. In considering the renewal of the Sub-Advisory Agreement with respect to each Fund, the Board, including the Independent Trustees, did not identify any single factor as controlling, and
each Trustee may have attributed different weights to the various factors. The Board reached the following conclusions regarding each Sub-Advisory Agreement, among others: (a) the Sub-Advisor is qualified to manage
each Fund's assets in accordance with the Fund's investment goals and policies; (b) the Sub-Advisor maintains an appropriate compliance program; (c) the overall performance of each Fund is satisfactory relative to the
performance of funds with similar investment objectives and relevant indices; (d) each Fund's sub-advisory fee is reasonable in light of the services received by the Fund from the Sub-Advisor and the other factors
considered; and (e) the Sub-Advisor's investment strategies are appropriate for pursuing the investment goals of each Fund. Based on its conclusions, the Board determined that approval of the Sub-Advisory Agreement
with respect to each Fund was in the best interests of the Fund and its shareholders.
69
PRIVACY PROTECTION POLICY
We Respect Your Privacy
Thank you for your
decision to invest with us. Touchstone and its affiliates have always placed a high value on the trust and confidence our clients place in us. We believe that confidence must be earned and validated through time. In
today’s world, when technology allows the sharing of information at light speeds, trust must be reinforced by our sincere pledge to take the steps necessary to ensure that the information you share with us is
treated with respect and confidentiality.
Our Pledge to Our Clients
• We collect
only the information we need to service your account and administer our business.
• We are committed to keeping your information confidential and we place strict limits and controls on the use and sharing of your information.
• We make
every effort to ensure the accuracy of your information.
We Collect the Following Nonpublic
Personal Information About You:
• Information we receive from you on or in applications or other forms, correspondence, or conversations, including, but not limited to, your name, address, phone number, social
security number, assets, income and date of birth; and
• Information about your transactions with us, our affiliates, or others, including, but not limited to, your account number and balance, payment history, parties to transactions,
cost basis information, and other financial information.
Categories of Information We
Disclose and Parties to Whom We Disclose
We do not disclose any
nonpublic personal information about our current or former clients to nonaffiliated third parties, except as required or permitted by law.
We Place Strict Limits and Controls
on the Use and Sharing of Your Information
• We restrict access to nonpublic personal information about you to authorized employees who need the information to administer your business.
• We maintain physical, electronic and procedural safeguards that comply with federal standards to protect this information.
• We do not disclose any nonpublic personal information about our current or former clients to anyone, except as required or permitted by law or as described in this document.
• We will not
sell your personal information to anyone.
We May Provide Information to
Service Your Account
Sometimes it is
necessary to provide information about you to various companies such as transfer agents, custodians and broker-dealers to facilitate the servicing of your account. These organizations have a legitimate business need
to see some of your personal information in order for us to provide service to you. We may disclose to these various companies the information that we collect as described above. We require that these companies,
including our own subsidiaries and affiliates, strictly maintain the confidentiality of this information and abide by all applicable laws. We do not permit these companies to sell the information for their own
purposes, and we never sell our customer information.
This policy is applicable
to the following affiliated companies: Touchstone Funds Group Trust, Touchstone Strategic Trust, Touchstone Variable Series Trust and Touchstone ETF Trust.
The Privacy Protection
Policy is not part of the Semi-Annual Report.
71
Touchstone Investments
Distributor
Touchstone Securities, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
800.638.8194
www.touchstoneinvestments.com
303 Broadway
Cincinnati, Ohio 45202-4203
800.638.8194
www.touchstoneinvestments.com
Investment Adviser
Touchstone Advisors, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
303 Broadway
Cincinnati, Ohio 45202-4203
Transfer Agent
BNY Mellon Investment Servicing (US)
Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
4400 Computer Drive
Westborough, Massachusetts 01581
Shareholder Service
800.543.0407
* A Member of Western &
Southern Financial Group
TSF-54BB-TST-SAR-2212
| (b) | Not applicable. |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
| (a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1(a) of this form. |
| (b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
| (a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
| (a)(1) | Not applicable. |
| (a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
| (a)(2)(1) | Not applicable. |
| (a)(2)(2) | Not applicable. |
| (b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) | Touchstone Strategic Trust |
| By (Signature and Title)* | /s/ E. Blake Moore, Jr. | |
| E. Blake Moore, Jr., President | ||
| (principal executive officer) | ||
| Date | March 1, 2023 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | /s/ E. Blake Moore, Jr. | |
| E. Blake Moore, Jr., President | ||
| (principal executive officer) | ||
| Date | March 1, 2023 |
| By (Signature and Title)* | /s/ Terrie A. Wiedenheft | |
| Terrie A. Wiedenheft, Controller and Treasurer | ||
| (principal financial officer) | ||
| Date | March 1, 2023 |
* Print the name and title of each signing officer under his or her signature.